The tax would skim a small percentage off financial transactions on Wall Street. (Photo Credit: The Star)
Protestors donning pointy green caps and masks took to the streets of 15 cities across America earlier this month. Their actions were meant to protest the recent financial failures of JPMorgan Chase & Co., a multinational banking corporation that reported losses of $2 billion this year. The Sherwood-inspired clothing was to bolster support for the Robin Hood tax. The Robin Hood tax is a financial transaction tax placed on stocks, bonds, credit swaps and derivatives. Depending on the transaction, an amount of money between 0.5 and 0.005 percent will be skimmed off and put toward federal programs, increasing their budgets without increasing personal income taxes. This would calculate to a rather small amount; just 50 cents for every $100. The rate is low specifically so that ordinary people and businesses that do not engage in high-volume trading would not be impacted. The money that would be gleaned from this tax is predicted to be in the hundreds of billions, if there is no reduction in trading. The tax's proceeds would fund education, healthcare, jobs, and climate concerns, according to Charles Idelson, a spokesperson for the American campaign. It's also meant to decrease high-risk trading. A contingent of the tax's supporters also see it as a way of getting back at banks and other Wall Street institutions that were bailed out. Critics argue that taxing financial transactions is unlikely to result in many of these benefits, and will instead cause companies to do their business overseas. Others raise concerns that the tax will in some way affect average citizens, such as harming retirement funds. Some critics predict that financial transaction taxes will increase market volatility, causing exchange rates to fluctuate more wildly. When Sweden enacted a similar tax in 1984, traders moved to the London Stock Exchange, according to a senior economist with the Investment Company Institute. Revenues from the taxes failed to meet expectations. Treasury Secretary Tim Geithner has not responded favorably to the tax, citing that it would be ineffective. Advocates of the tax include Bill Gates and Al Gore, along with a slew of celebrities. Watch Bill Nighy in this campaign video: The Robin Hood tax is also hotly debated in Britain, which also sees its fair share of protests. Several other countries within the European Union are considering the tax, and around 40 countries worldwide have implemented a form of the tax. An EU-wide levy proposal was discarded last week, although other countries remain open to the possibility of creating their own taxes. The 2008 global recession triggered discussion about financial transaction taxes, although the idea has been around since economist James Tobin spoke on transaction taxes in 1970. The Robin Hood tax is a risky prospect, but if it does work as theorized it would have a great impact. For more information about the Robin Hood Tax, including ways to get involved, visit http://robinhoodtax.org. Do you think the Robin Hood tax is a good idea?
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