Bankers, Financial Speculators & Lobbyists React in Horror to idea of a "1% Sales Tax on Wall Street"

Update: After helping launching a campaign to save California through a 1% tax on speculative trading activities, we expected some pushback from the Wall Steet financier clique and their powerful lobbying arm, the Chamber of Commerce - and here it is:

from the March 11th edition of The Guardian)
US Chamber of Commerce slams Tobin tax proposals
http://www.guardian.co.uk/business/2010/mar/11/us-chamber-commerce-tobin-tax

Indeed, the bankers are correctto fear for their excessive profits, which are squeezed out of the working people by such tricks as speculating the price of gasoline up to $4.50 a gallon (from which Goldman Sachs profited about $1.00 each gallon) via speculation in ICE trading, futures markets, and market manipulation.

From San Diego to the City of London, those who WORK for a living are starting to look at the concept of a "Sales Tax on Wall Street", (a VERY modest one, mind you) of only 1% on each securities trade over $1 million in valude, compared to the 8.25 to 10.25% sales tax that Californians must pay on necessities like school supplies.

The idea of taxing speculative trades was proposed by Nobel prize-winning economist James Tobin in 1972. Recently, Congressman Peter DeFazio (D-Oregon) and union leaders in the AFL-CIO have joined this growing and urgent call to implement small levies on speculative trades in a way to help rescue failing cities, counties and state governments.

I am very pleased by the U.S. Chamber of Commerce's howls of impotent fury in response. There are few greater compliments than to have one's ideas attacked by the paid 'Meretrices' of the parastic financiers -- it gives the proposal for a "Tobin Tax" idea a sharp edge, and credence.

As New Dealer Franklin Roosevelt said in 1933, "The Wall Street Banks hate me; and I welcome their hatred." We will see more push-back from Wall Street. As the popular movement to save states like California, Iceland, New York, Greece and Spain gathers international steam, we will be treated to the spectacle of Wall Street and its lobby arms starting to look like Rush Limbaugh at a PRIDE parade -- the Chamber will be sputtering in rage, howling epithets and protestations of purple fury.


In fact, the U.S. Chamber of Commerce (which is currently aggressively lobbying against any Consumer Financial protections) howls, if a Sales Tax on Speculation is implemented the "stock market will plunge" -- and it "would hurt Main Street!"

Really.

Think about it: we Californians pay nearly 10% in sales tax on things like our kids' school supplies and shoes. The hedge funds, banks, and entities like Goldman Sachs pay ZERO sales tax on their speculation on oil, electricity, commodities, mortgages, and the like.

As these ideas percolate up through our consciousness, and gain traction, the Chamber and allies on Wall Street (and San Francisco's financier establishment) will surely launch a howling and distortion-fueled PR campaign of opposition -- and with every fear-inducing soundbite coming across the TV screen, you will be further convinced of why the bankster class, engorged with wealth transferred from your pocket to their, fears such ideas so much.

The good news? If such a modest sales tax were to be implemented, Wall Street will survive. In fact, resilent as ever, the markets will simply adapt away from pure speculation and "betting", and towards productive investment. (Right now, pure bets of billions and trillions are the most lucrative, precisely because they face no regulation nor fee.)

What will happen to California if we don't get serious about calling for similar "Tobin tax" proposals coming into legislation? Without a revenue-producing giant like this (capable of turning $15 to $60 billion annually), the chances of the state of California surviving as we know it are slim.

The threat of California bond debt default looms, which can only be avoided with savage cuts across critical functions. (Hedge funds are already buying and selling positions in order to turn a profit on a California default, believe it or not. JPMorganChase and other large financiers have already placing large bets on Greece and Spain defaulting, and stand to make a killing. (Literally.)

Why do we believe that a small "Tobin Tax" on speculative trades may be able to help rescue the Golden State, which faces a $20.7 billion shortfall? The world-wide notional value of derivatives trades (and all securities transferred) annually has skyrocketed to estimated $743 trillion to $1.5 quadrillion. California's fraction of that trading is estimated at well over $6 trillon each year. One percent of Six Trillion is a big number.

Here's our proposal: Make all derivative trades reportable, just like equity trades are (i.e. stocks) -- and levy a 1% tax on trades of over $1,000,000 annually -- so that it is a "Millionaire's Tax" -- and a fairly modest one, at that.

What follows is a short resolution submitted to the California Democratic Party and a number of political clubs.

Emergency California Economic Stabilization via a One Percent Sales Tax on Wall Street Speculation”

Whereas reckless and unregulated financial speculation by investment banks and hedge funds in securities transactions, particularly the use of derivatives to manipulate markets, has contributed to spikes in California prices of electricity, oil, and commodities via a hidden and massive financier “tax” on working people, and speculation results in the siphoning of capital away from investment desperately-needed productive manufacturing enterprises, and

Whereas the State of California is in a state of budgetary crisis, with a predicted deficit for 2010-11 of at a staggering $20.7 billion, and faces greater rounds of austerity measures, including cuts to fire crews, educators, and police, coupled with continually increasing unemployment and a contracting tax revenue base,

Whereas of California’s fraction of the est. $743 to $1,500 trillion global annual securities and derivatives turnover, investment banks and hedge funds operating in California currently pay zero sales tax on speculation and trading, in contrast to the highly regressive sales tax of between 8.25% to 10.25% paid by Californians on purchase of items including children’s shoes and school supplies;

Therefore be it Resolved that the [institution or group ] proposes that “Wall Street banks” and hedge funds pay a fair share in California through the levy of a 1% “Sales Tax on Wall Street” (aka “Tobin Tax” after Nobel Prize Winning Economist James Tobin) on all securities transfers of greater in value than cumulative $1,000,000 per year per seller (exempting the vast majority of retirement-associated investment moves) and that over-the-counter derivative transactions currently hidden be made reportable and subject to the same levy, particularly speculation in oil futures, credit derivatives, commodities, foreign exchange, and mortgage-backed securities,

Be it further resolved that a such a “Sales Tax on Wall Street ” on securities transfers, notably may generate revenue of between $15 and $60 billion in the first year, and be used for the purpose of lowering or eliminating the California state budget deficit, to reduce tax burdens on job-creating small businesses, and off-set or reduce California’s high personal income tax, all of which would have a net effect of creating a desperately-needed new sources of revenue for California, as well as returning investment flows towards creation of job-producing enterprises and productive manufacturing (including energy-efficient technology), rather than to the reckless speculative “casino finance” currently created by investment banks and hedge funds.

Authors: Mike Copass & Derek Casady, San Diego CA