Bill Gates Advocates Tax On Financial Transactions

First time accepted submitter wanzeo writes "With the current G-20 summit dominated by global financial uncertainty, previously unsuccessful tax strategies are getting new attention. In a short interview with the BBC, Bill Gates explains his support for a potential tax on financial transactions. The concept is sometimes called the Tobin tax after its originator, Nobel Laureate economist James Tobin, who first put forth the idea in 1972. Gates points to the success of Britain's Security Settlement Tax, and suggests that large economies like Germany, France, and the U.S. have expressed interest in his plan."

Comments

There is no Nobel Prize for economics

[Anonymous Coward]

Stop perpetuating a falsehood. There are no Nobel prizes for astrology, professional wrestling, air guitar or economics.

Re:There is no Nobel Prize for economics

[LoyalOpposition]

There are no Nobel prizes for...economics.

While, strictly speaking, that's true, it's close enough to the truth as to make little or no difference. There is a periodic prize that's awarded at the same time the Nobel prizes are awarded. This particular prize is given for achievements in economics, and the decision as to whom to award the gift to is made by the same people who award the Nobel prizes. It's called The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Your statement is little more than an exercise in pedantics.

  ~Loyal

Stocks, bonds, derivatives, or foreign currency

[tepples]

Did you read the next page of the article with the guy dressed up like Link from The Legend of Zelda? Proposals include a tax on large trades in stocks, bonds, derivatives, or foreign currency.

Re:Stocks, bonds, derivatives, or foreign currency

[cavreader]

Pension funds are vulnerable and closely tied to the companies fund management. Pension funds get looted and devalued when a company goes bankrupt because their Pension fund managers usually invest the funds in the companies own stock. 401K and Ira's at least allow the employee some control over how his retirement savings are being invested. You can chose from savings account return rates to more risky higher return options. A lot of companies also include some percentage of matching funds in their 401K's. 401K's also lower the taxes applied to your paycheck and if you do not try and use your 401k funds before retirement the amount of taxes you pay in the future are still less than the amount of taxes you would have paid in your paychecks. If you are a true paranoid you can set up multiple savings accounts that only contain the amount of money the government guarantees in case of bank failures. Your interest earned would be low but your funds will be relatively secure.

Re:Stocks, bonds, derivatives, or foreign currency

[sed quid in infernos]

I far prefer having a 401k than a pension plan. It gives me more job mobility - most pensions back-load the benefits, so that those who move from job to job have less at retirement - and puts me less at the mercy of corrupt management or corrupt union bosses (depending on who manages the pension fund). It also allows companies to easily predict compensation costs associated with retirement, which as an employee prevents me from facing an underfunded pension plan that ends up paying pennies on the dollar.

The only downside for me is that I face the market risk, rather than the pension fund. But I have more flexibility to do that than I do in a pension fund - check out how many pension funds have become insolvent - so I'm ok with that.

Misleading post!

[WileyC]

The "Tobin tax" specifically targets currency trading, not "financial transactions" in general. In fact, the title/body of the original article are so misleading, it should probably be yanked as troll bait. All the gory details can be had here: http://en.wikipedia.org/wiki/Tobin_tax

Re:Higher taxes only affect some wealthy...

[LordNacho]

If you're looking for the economic term for your two different kinds of rich people, you're looking for "rent seekers" (which are opposed to less well defined people as "entrepreneur" or "capitalist" or "wealth creator"). I'd look it up on Wikipedia, and you can develop it a bit more.

As for why it's relevant to the debate, typically rent seekers are sitting on some sort of privilege (in law or in the market).

I would however comment that both Warren and Bill are beyond the point where they're sensitive to financial incentives.

Re:Instead of Financial transactions?

[Anonymous Coward]

Why should someone who "earns" $75k gambling on the stock market pay half the tax of someone earning $75k working as a roofer? The stock answer to that is "the stock market investor has huge risks!" Really? He's only risking money, the roofer risks his very LIFE.

If that's the stock answer you get, then I suppose you are asking the wrong person. The right reason why capital gains are taxed lower is because they've already received an additional tax before being distributed. Capital gains, are subject to a corporate income tax before they are distributed, so they are taxed both before and after distribution. Salary, on the other hand, is NOT subject to corporate taxation (contrary to what Joe the Plumber would have you think), so the only taxation it receives is the income tax after it's paid out. The lower value of capital gains tax is supposed to even this out.

Now, capital gains can come in a few different forms. It can come in the form of a dividend, which clearly works as described above. On the other hand, it can also come in the form of an increase in the stock value, and that's not so clearly tied to the corporate assets. In theory it should be somewhat reflective of the corporate assets, and those assets have likewise been reduced by the amount of the corporate tax, so to that degree, the above holds true. However, stock value also has a large component that ISN'T tied directly to corporate assets, but rather just to the whims of the market, and I think it's fair to say that portion of it is only subject to the capital gains rate.

Note, I'm not saying I believe the capital gains rate is too high, too low, or just right. I'm merely explaining the logic behind it being lower.

Re:Instead of Financial transactions?

[Lehk228]

capital gains are NOT double taxed, you would be thinking of taxes on dividends.

capital gains should, if anything, be taxed as unearned income