New taxes in the Eurozone don’t typically raise new eyebrows, but one tax proposal in particular is generating strong feelings on the American side of the Atlantic Ocean from congressional Democrats and some affiliated with the Occupy Wall Street movement who want to see it implemented globally.
In a September 28 press release, the European Commission said a new tax on all transactions between financial institutions would “make the financial sector pay its fair share.” The tax would be levied on securities and derivative transactions whenever at least one of the participating banks is located in Europe.
As part of a deal to keep the Euro currency afloat, 27 European countries recently signed on to the proposal. A European Commission study predicts the 0.1 percent tax on stock and bond trades, and a 0.01 percent levy on derivatives, will produce between $21 billion and $53 billion every year.
The fee has become a rallying cry for Occupy enthusiasts who view Wall Street, and derivatives traders especially, as the source of an impending worldwide financial collapse. They believe banks should be forced to share their wealth to pay for more social programs.
Center for Budget and Tax Accountability policy director Ron Baiman, who helped design a financial transactions tax in Chicago with an Occupy-related group called Stand Up Chicago, told The Daily Caller a global bank-transactions fee would sit well with the protest movement.
“Occupy has been very good in stimulating discussion on inequity and Wall Street’s role in it,” Baiman told TheDC. And while Obama Treasury Secretary Tim Geithner told his European counterparts in September that the United States is opposed to the idea, at least a few American lawmakers have already leaped ahead to copy it.
In November, Oregon Democratic Rep. Pete DeFazio and Iowa Democratic Sen. Tom Harkin introduced the Wall Street Trading and Speculators Tax Act, a bill that has 19 House cosponsors and two in the Senate. No Republicans have signed on, but New York Times liberal columnist Paul Krugman was among the idea’s earliest cheerleaders, endorsing a “punitive tax” in order to raise sufficient government funds to avoid future “harsh spending cuts.”
The Occupy movement sees rallying support for the DeFazio–Harkin proposal as a crucial step to prevent European banking taxes from merely driving more stock speculators into the arms of Wall Street. If the playing field were even on both sides of the Atlantic, as the Huffington Post has reported, “there would be little haven left for speculative trading.” (RELATED: Full coverage of the European debt crisis)
“Everyone would agree that globally would be best,” Baiman told TheDC. A globalized bank-transactions tax is already favored in some form by billionaires Bill Gates, Warren Buffet and George Soros, former Vice President Al Gore, consumer activist and serial presidential candidate Ralph Nader and Pope Benedict XVI.
Soros, in particular, has enthusiastically championed the idea since at least 2009, when then-UK Prime Minister Gordon Brown proposed it publicly. The idea, Soros said, “fit in with everything I’m saying needs to be done. … The banks should, when they can, be a source of taxation, having been a drain on taxpayers.”