# Ellen Brown on Taxing the Financial Markets



## onq (1 Jul 2010)

http://www.globalresearch.ca/index.php?context=va&aid=19980

The article is written mainly about the American situation, where vat is proposed to come in, but refers to the EU and raises awareness of the relative success of North Dakota, the high profits and low taxes paid by financial institutions like Goldman Sachs and the realistic proposal of taxing the financial markets at point of sale.

ONQ.

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_States, of course, don’t even have their own state-owned banks, with one  exception -- North Dakota  .  North  Dakota is also the only state now sporting a  budget surplus, and it has the lowest unemployment and mortgage  delinquency rates in the country.  As von Drehle  observes, “It’s a swell time to be North Dakota .” _

_But most states are dealing with serious, chronic defaults, putting them  in the same debt trap as Greece : they are being  forced to lay off workers, sell public assets, and look for ways to  squeeze more taxes out of an already over-taxed populace.   And their situation is slated to get worse, since the federal  government’s stimulus package will soon be cut, along with assistance to  the states. _
_Instead  of “reflating” the collapsed economy, however, national governments are  insisting on “fiscal responsibility;” and the responsibility is all  being put on the states and the laboring and producing classes.  The financial speculators who caused the debacle are  largely getting off scot free.  They not only pay  no tax on the purchase and sale of their “financial products,” but they  pay very little in the way of income taxes.  Goldman  Sachs paid an effective income tax rate of only 1%  in 2008.  Prof. Hossein-Zadehi writes: __“It is  increasingly becoming clear that the working majority around the world  face a common enemy: an unproductive financial oligarchy that, like  parasites, sucks the economic blood out of the working people, simply by  trading and/or betting on claims of ownership. . . . The real question  is when the working people and other victims of the unjust debt burden  will grasp the gravity of this challenge, and rise to the critical task  of breaking free from the shackles of debt and depression.” _​_Working  people don’t rise to the task because they have been propagandized into  believing that “fiscal austerity” is something that needs to be done in  order to save their children from an even worse fate.  What  actually needs to happen in a deflationary collapse is to spend more  money into the system, not pull it back out by paying off the federal  debt; but the money needs to go into the real economy – into factories,  farms, businesses, housing, transportation, sustainable energy systems,  health care, education.  Instead, the stimulus  money has been hijacked, diverted into cleaning up the toxic balance  sheets of the financial gamblers who propelled the economy into its  perilous dive. _ 
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While Congress caters to the banks, the states have been left to fend  for themselves.  Where is the money to come from  to pull off the impossible feat of balancing their budgets?  Bleeding a VAT tax out of an already-anemic working  class is more likely to kill the patient than to alleviate the disease.  “Unlike EU countries, where the VAT is the largest  single source of tax revenue,” notes Professor Randall G. Holcombe in a recent study, “the states of the United States  already tax the VAT tax base with their sales taxes.”  This  doubling down on the same base would not only reduce the amount of  money states are able to raise, but it would seriously hinder VAT’s role  as a money generator.  By 2030, says Prof.  Holcombe, this effect would have offset any increase in government  revenue from the VAT. _
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A more viable and more equitable solution would be to tap into the only  major market left on the planet that is not now subject to a sales tax –  the “financial products” that are the stock in trade of the robust  financial sector itself.  A financial transaction tax on speculative  trading is sometimes called a “Tobin tax,” after the man who first  proposed it, Nobel laureate economist James Tobin.  The  revenue potential of a Tobin tax is huge. * The  Bank for International Settlements reported in 2008 that total annual  derivatives trades were $1.14 quadrillion (a quadrillion is a  thousand trillion).  That figure was probably low,  since over-the-counter trades are unreported and their magnitude is  unknown.  A mere 1% tax on $1 quadrillion in  trades would generate $10 trillion annually in public funds.  That is only for derivatives.  There  are also stocks, bonds and other financial trades to throw in the mix;  and more than half of this trading occurs in the United States*_


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## tyoung (1 Jul 2010)

Absolutely agree. A transaction tax(at a very low level,say 0.1%) is necessary to throw sand in the wheels of the high frequency traders etc.


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