Sure, it’s an overstatement to say it alone could save the world, but a tiny tax on Wall Street trades could stack up to hundreds of billions of dollars in revenue that could be used for essential public projects like addressing climate change, fighting poverty, or better enforcement of our nation’s consumer protection laws.
Wall Street Tax (also called Financial Transaction Tax or Robin Hood Tax) proposals in Congress range from 0.03 percent (3 cents on every $100 traded) to 0.5 percent; revenue projections vary accordingly, from $352 billion over ten years to more than $350 billion every year. That’s a lot of funding for programs that are right now suffering under a false premise of austerity that has slashed the social safety net and stymied progressive proposals that could make real headway in solving some of our most pressing issues.
It’s also clear that a Wall Street Tax could save our markets from harmful volatility. Today is the fifth anniversary of the 2010 “flash crash” that shocked markets, causing the Dow Jones to lose nearly 1,000 points in a matter of minutes. Nearly $1 trillion was temporarily erased from the market.
Media reports have linked the cause of the flash crash to illegal “spoofing” – one man was arrested recently for allegedly engaging in illegal market manipulation related to the crash. Nevertheless, it’s well understood that high-frequency trading algorithms exacerbated the devastating impacts to the market five years ago today. This type of high-speed trading was documented in Michael Lewis’ exposé, Flash Boys: A Wall Street Revolt which has helped inform the public about the practice over the past year since the book was published.
By making certain types of trading unprofitable (i.e sheer market speculation and microsecond advantages due to huge volumes of trades), a small fee on trades would calm volatile markets that are currently overrun with high-frequency trading. That’s why, in observation of the flash crash anniversary, Public Citizen is renewing its call for a tax on Wall Street trades. In partnership with allies from around the world, the petition also will support the international Million Strong campaign, which has garnered 1.1 million action-takers so far, earning this tax the nickname “The Most Popular Tax in the World.”
International supporters of the financial transaction tax (FTT) are making a series of “Million Strong” announcements publicizing that the campaign’s goal has been met. The announcements coincide with the May 12 meeting of European financial ministers to decide the contours of an 11-nation collaborative FTT .
That’s where you come in! YOU can be one of the Million Strong! Please sign the petition and help spread the word by Tweeting #FlashCrash and #WallStTax.
A small fee on financial transactions like stocks, bonds, and derivative trades can beat back unproductive high-frequency trading at the same time as refilling government coffers. Help make sure the world’s leaders get the message loud and clear: We won’t stop until we get a tax on Wall Street trades!
Susan Harley is the Deputy Director of Public Citizen’s Congress Watch Division