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tax the speculators

February 7, 2009

I am certainly no expert when it comes to our tax system, but I agree with Ralph Nader 100% that we should tax the speculators on Wall Street. Considering that we as a nation are faced with a gigantic deficit, a deepening recession and tax cuts that will further limit revenue on both the state and federal level, I think that Congress should seriously consider instituting what University of Massachusetts economist, Robert Pollin, describes as a “small tax on all financial-market transactions, comparable to a sales tax.”

Not only have Wall Street speculators done their fair share to get us in this mess, but a transaction tax would go a long way toward helping Wall Street pay for its own bailout. It seems more than fair to institute a suggested tax of 0.25% on a stock trade or 0.02% on the purchase of credit default swap when most people in the United States have to pay anywhere from 5% to 8% sales tax on whatever they buy.

I am surprised that there has not been more discussion on this issue seeing as how this modest tax proposal would not only generate more revenue and discourage rampant speculation, but according to economist Dean Baker, a modest financial transactions tax would “easily raise an amount equal to 1% of GDP” and potentially “finance a 10% across-the-board reduction in the income tax.” Wouldn’t that be nice?

That is why I urge everyone who feels the same to lobby their member of Congress to support this proposed tax policy. I know that the subject of new taxes is not a popular topic of conversation these days, but in drastic economic times such as this, something has to be done to help raise more revenue, curb speculation and, more important, stabilize the market. And I am convinced that this is a step in the right direction. I think it is time that someone besides the American tax-payer is asked to help shoulder this burden.

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