The fiscal problems of the United States are largely due to the fact that Wall Street pays no taxes. While working families pay ever-increasing sales, income and property taxes, Wall Street speculators pay no tax on their share of an estimated annual turnover of over $5 quadrillion (5,000 trillion dollars) in stocks, bonds and derivatives. A 1% tax on these sales, equally divided between the federal and state governments, would by most estimates bring hundreds of billions annually into public treasuries and largely solve budget deficits at all levels of government. The Wall Street Sales Tax also discourages the most dangerous forms of speculation, especially derivatives speculation, and helps to level the playing field between financial services – which are now in effect subsidized because they are not taxed – and the tangible, physical production of manufactured goods on which our economic survival depends.
A small federal tax on securities transfer was in effect until the Johnson administration. In New York State, a small transfer tax remains on the books, but the $20 to $30 billion yearly proceeds are being remitted to the zombie banks as a result of successful Wall Street extortion. A Wall Street Sales Tax has been endorsed by a growing number of public figures, economists, journalists and legislators, with several bills already having been introduced into the US Congress.
In May, 2014, 11 member states of the European Union, including Germany and France, agreed to implement the European Union financial transaction tax (EU FTT), which is estimated to charge 0.1% on the sale of stocks and bonds, and 0.01% on derivatives. Opposition to this tax has been centered in Wall Street, Chicago and London.
In addition to a 1% Wall Street Sales Tax, we must restore and update the regulation of financial services to prohibit toxic financial instruments, and to separate the earned wealth of savings and retirement accounts from the speculative profits of Wall Street.
1% Wall Street Sales Tax
- We demand a 1% tax paid by all US sellers of stocks, corporate bonds and derivatives, all of which must be traded and reported on open exchanges.
- The proceeds of this tax will be split between the federal and state governments, and directed to the full funding of the social safety net and public education.
- Household-level investment must be protected with a $1 million yearly exemption. The 1% Wall Street Sales Tax is not a "wealth tax" but a sales tax directed at professional financial speculators.
- End all bailouts of banks and financial institutions.
- Claw back the TARP and other public money given or lent to financiers.
- Abolish the notion of too big to fail; JP Morgan, Goldman Sachs, Citibank, Wells Fargo and other Wall Street zombie banks are insolvent and must be seized by the FDIC for chapter 7 liquidation, with derivatives eliminated by triage.
- Re-institute the Glass-Steagall firewall to separate banks, brokerages, and insurance.
- Ban credit default swaps, collateralized debt obligations, structured investment vehicles, commodity index swaps and exchange traded funds based on synthetic commodity futures.
- Set up a 15% reserve requirement for all OTC derivatives.
- Set a 10% maximum rate of interest on credit cards and payday loan: restore state and federal anti-usury laws. Ban adjustable-rate mortgages.
- Re-regulate commodities markets with 100% margin requirements, position limits, and anti-speculation protections for hedgers and end users to prevent oil, gasoline and food price spikes.
- Restore individual chapter 11.