Tax Wall Street, Save Main Street
When imagining the type of investment that is going to grow jobs in our communities, it’s not high-speed trading using computer algorithms to make millisecond trades meant to eek out the tiniest of profits before passing along a stock to the next buyer. Instead we think of long-term investments meant to provide capital to brick and mortar companies that will then directly invest in our communities—hiring workers, contracting with vendors, on and on. These are sort of long-term investments that will revitalize Main Streets across the nation, and thus they should be incentivized.
However, while there’s still profit to be made, there’s no way to stop short-term traders who are only looking to make a buck. Worse, these high-speed trading computer programs feed off of each other, always chasing the next big trading trend. Unfortunately, that can leave the rest of us high and dry if something goes awry, as it did nearly seven years ago on May 6, 2010 when a massive trade by an algorithm spawned a “flash crash” market contagion and trillions in value were lost in a matter of minutes.
Ending the market speculation that can lead to these sorts of mini crashes is hugely important for the long-term health of our economy, as we seek to soothe the peaks and valleys of the market’s booms and busts. Imposing a miniscule tax on Wall Street trades would do much to help solidify the markets and avoid additional flash crash events since it would make high-frequency trading unprofitable while barely impacting average investors.
Congressman DeFazio’s (D-Ore.) recently reintroduced bill, Putting Main Street FIRST (Finishing Irresponsible Reckless Speculative Trading) Act of 2017 would tame markets by putting a tiny tax of three cents per every $100 traded (.03%) on the sale of stocks, bonds, and derivatives. In a video introducing the bill on Wednesday, Congressman DeFazio said, “trading in microseconds… driven by computer algorithms adds nothing to this economy. It is essentially a leech on the economy, in fact, and to the disadvantage of real investors: value investors, long-term investors, pension funds and others. “
An added bonus of all of this market correction is that even at such a tiny tax rate, all of those taxed pennies stack up to a bundle of revenue for our continually cash-strapped government coffers. Government estimates for Rep. DeFazio’s bill estimate that it could generate more than $417 billion over ten years.
There’s a lot we could do with that money to improve communities and regrow jobs across the nation. For example, that’s an awful lot of bridges and streets that could be repaired, Main Street and otherwise.
In short: To save Main Street, we need to tax Wall Street.