As the clock ticks down to the deep federal budget cuts known as the sequester kick in Friday, the nation’s new Treasury secretary is coming under fire for his opposition to a tax on financial transactions.
In a statement reported by Bloomberg news, Lew escalated the Obama administration’s opposition to a small tax on Wall Street trades that could raise hundreds of billions of dollars for repairing the U.S. economy – in sharp contrast to the direction of many of the leading nations of Europe which are moving to enact a similar tax, according to a politically progressive nurses union.
“With such concern in Washington about the sequestration and the need for additional revenue, it is appalling that the administration’s incoming Treasury Secretary would be protecting the Wall Street barons by opposing a small tax on the very people who created our economic disaster,” says Deborah Burger, RN, co-president of National Nurses United (NNU).
“Nurses daily see the worsening health consequences of persistent economic crisis facing many families and know our communities need the help a tax on Wall Street can provide,” Burger adds. “That’s why so many nations in Europe and other major markets in the world are acting to hold the bankers and traders accountable and require them to pay their fair share. The Obama administration should be joining with other nations, not standing in the way.”
Notably, Lew’s remarks were reported Monday on the same day European Union Tax Commissioner Algirdas Semeta was describing in a Washington speech how many of Europe’s biggest countries are going in the opposite direction.
“The financial sector is under taxed compared to other sectors,” says Semeta. “We (the EU) are ready to lead the way.” France, Germany, Italy, Spain, Portugal, Belgium, Austria, Greece, Estonia, Slovenia, and Slovakia have all endorsed a financial transaction tax, joining with the fastest growing markets in Asia and other major world exchanges.
“The tax also has supporters here which I want to encourage,” adds Semeta.
A growing movement for a U.S. version of the FTT, which advocates call the Robin Hood tax, is engaging in grass roots actions in support of the tax and supporting the Inclusive Prosperity Act, introduced by Rep. Keith Ellison (D-Minn.), which is expected to be reintroduced soon.
With a tax of 50 cents for every $100 in trades of stocks, and less on bonds, derivatives and other financial instruments, the Ellison bill could raise up to $350 billion every year – providing a major revenue source for healthcare, jobs, and fighting AIDS and climate change among other basic needs, supporters contend.
An FTT would also serve to stabilize markets by limiting high-speed, high-volume trades and by constraining price spikes in essentials, like food and gas, tied to speculative trading, supporters add.
In his Washington speech, Semeta noted that high-frequency trading has led to transactions that “do not have any social value,” adding the tax would “reorient the financial sector” around the real economy.
Lew’s opposition to the tax even goes beyond the stance of outgoing Treasury Secretary Timothy Geithner who lobbied against European nations adopting the tax, a position he ultimately stepped back from after considerable criticism in Europe.
In the statement Monday, from comments made by Lew to written questions by Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, Lew claimed that an FTT “would be vulnerable to evasion, create incentives for financial re-engineering, and burden retail investors.”
Those claims, say NNU, have been proven wrong by the success of transaction taxes in the dozens of nations that have adopted taxes on financial activity, the very reason EU nations are moving rapidly to implement the tax as an important source of revenue.
For example, since trading is highly automated and more than 70 percent of trades go through computerized central clearing houses, trades are easy to monitor and the tax is extremely difficult to evade, the union says.
“Americans pay a sales tax on virtually all consumer activity,” says Burger. “Why should the biggest banks and stock traders who did so much to harm our communities be exempted and protected?”