A tiny tax on Wall Street speculation could raise billions for education, healthcare, infrastructure, and other services we desperately need and deserve.
By Noah Streng
A financial transaction tax (FTT)—a tiny tax on Wall Street trades—would raise hundreds of billions of dollars for vital public services and be mostly paid for by the very wealthy. There are two proposed versions of legislation introduced this Congress that would implement this tax.
The Wall Street Tax Act would tax trades of stocks, bonds, and derivatives at a rate of 10 cents per $100 traded and raise $752 billion in revenue over 10 years. The Tax on Wall Street Speculation Act would enact a tax of 0.5% on stocks, 0.1% on bonds, and 0.005% on derivatives, raising nearly $628 billion over a decade.. In addition to the revenue raised, an FTT would discourage harmful high frequency trading (HFT) which increases market volatility, and increase long-term investment in our economy.
An overwhelming 8 million Americans have slipped into poverty amid the coronavirus pandemic. Meanwhile, the stock market ended 2020 at record highs and American billionaires have increased their wealth by over $1.8 trillion. We cannot continue to allow Wall Street and the ultra-wealthy to rig our economy in their favor while the rest of us suffer. It is time for us to unrig our broken tax system and make the wealthy pay their fair share, investing hundreds of billions of much-needed funding into healthcare, education, jobs, and COVID-19 relief.
A panel earlier this year featuring speakers from Public Citizen, Brookings Institution, CWA, the AFL-CIO, and the Take on Wall Street Campaign made the case for a robust FTT to reinvigorate our economy and make Wall Street pay its fair share. Brookings’s Aaron Klein explained that a FTT is highly progressive, with about 40% of the tax estimated to be paid for by households in the top 1% of income. This is because most stocks are owned by the wealthiest of Americans. Meanwhile, middle income Americans would pay less than 5% of the tax and half the country would not be affected at all because they own no stock, even indirectly. With so much to gain and nothing to lose, it’s not surprising that a majority of voters support an FTT.
Importantly, the lack of a progressive FTT contributes largely to the racial wealth gap within the United States. Racist socioeconomic laws in housing, education, and employment have systematically excluded Black, Latinx, and other families of color from the wealth-building opportunities which have benefited white families for generations. Today, only a third of Black households own any stock while the ownership rate for white households is over 60%. By better funding public services like education and working-family tax credits, an FTT could help address these inequalities and encourage long-term public investment in the economy which benefits all Americans.
It was Wall Street’s recklessness that crashed our economy over a decade ago. It was our money as taxpayers that bailed them out. Now, it’s time for Wall Street to pay its fair share. Congress must enact a progressive FTT, unrig our economy and invest in working people.