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8 Reasons Wall Street Greed Is the Cause, and the Solution, To Phony Fiscal Cliff Crisis

Big Finance is once again getting a free pass.

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6. Wall Street Is the Only Industry Without a Sales Tax

Wall Street buys and sells trillions of dollars of stocks, bonds and derivatives each year. And none of those sales are taxed...unless they take place in London which has a financial transaction tax on stock sales (and it's been in place for the past 300 years or so).

I asked Tim Geithner, the Treasury Secretary, why we don't have one. Here's how a "Treasury Department official" responded on his behalf:

A financial transaction tax (FTT) is not an idea we are planning to support in the U.S.

FTTs are hard to implement globally, are generally borne by retail investors, are prone to regulatory arbitrage, depress asset prices and trading volumes, and increase capital costs.

The Obama Administration's Financial Crisis Responsibility Fee applies at the institutional level, levied as a tax on certain liabilities of large financial firms in order to discourage excessive leverage. This is fully consistent with the principles agreed to by the G-20 Leaders. In our view, a tax on liabilities is a better way to generate funding while addressing excessive leverage.

Not only would Geithner's proposed fee be minuscule, but guess what? That fee hasn't been implemented and was never even mentioned during the campaign. So Wall Street is still paying bupkis for the damage it has done.

7. If President Obama and the Democrats Had the Guts to Take on Wall Street, There Would Be No Need for Fiscal Cliff Debates

A small financial transaction tax on all of Wall Street's transactions -- from stocks and bonds to every exotic instrument our greedy financial "engineers" dream up -- could easily generate more than a trillion dollars of revenue over the next decade. Eliminate the vulgar carried interest loophole and you'll generate another $200 billion. Better yet, take some of that money to put our people back to work and to pay for our kids to go to public colleges tuition-free. Then you'll have an economic boom that will make our debt nearly vanish as a percent of GDP.

8. Making Wall Street Pay for the Damage It has Done Is an Easy Sell to the American People

Wall Street has got to be the most hated institution in the entire country -- excepting Congress, of course. Nearly every American is furious about what financial elites get away with. There's a reason why Occupy Wall Street hit such a raw nerve. If the president went to the American people and said it was time to make Wall Street pay and sacrifice like the rest of us, he would ignite a tidal wave of support.

And if we had a progressive movement that could sustain a campaign for economic justice and Wall Street accountability, maybe, just maybe, we could force the president to do the right thing.

Les Leopold is the executive director of the Labor Institute in New York, and author of How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America's Wealth (J. Wiley and Sons, 2013).

 

 
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