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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."
This might be one of those rare times when I actually agree with Bill Gates. A tax on financial transactions should reduce or stop some of the most exploitive behavior in the financial world. "High frequency" trading would become much less profitable, as would the even less ethical exploit of attempting to generate out of date quotes by overloading a trading system system.
Fanatically anti-fanatical
... but the government needs to overhaul the system of taxation to a simple system without loopholes, and stop trying to figure out a way to tax everything we do. Once upon a time we didn't even need income taxes; times change, but having the government intrude on every aspect of our lives so that they can tax every little thing is not the way to go.
You have to ask what is the purpose of taxes to begin with; why do we need them and what's the most effective way to accomplish that, not keep coming up with new schemes that likely can have negative impacts on the economy. Every time the government creates a new tax, the cost of compliance adds to the amount that the government collects; more accountants need to be paid, more paperwork needs to be filled out.... the cost of compliance for the current system (not the taxes paid, but the resources spent figuring out what to pay). The tax foundation projects compliance costs to be in the hundreds of billions (Total Federal Income Tax Compliance Costs, 1990-2015).
There's got to be a better way - overhaul the tax system, don't keep adding to the mess it already is.
If we don't stop this nonsense, we're going to be taxed for every action we take and the fourth amendment will be a joke. You'll have a federal tax on food (eat beef? Well, beef causes global warming, so you'll have to pay), a commute to work tax; have coffee break tax; drive anywhere tax (this will be beyond what we already pay in gasoline taxes). Every time money changes hands? Is that what you really want? Lend me $20 and pay a tax? How about both of us? Lender tax and borrower tax, and then a pay-you-back (loan repayment) tax. How about a tax on getting money from your ATM? Or transferring money from one account to another? Or every time you pay a bill? It's simply ridiculous to continue along this path.
Stupid sexy Flanders.
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
I aim to misbehave.
Here's my economic theory of taxing the wealthy. You won't find it in any textbook. It may be right, or it may be crazy...
There are two types of wealthy people: the ones that actually create economic value (the Buffets, Jobs, and Gates of the world), and the ones who don't.
The latter became rich, not because of what they accomplished, but because they knew the right people. Went to the right schools. Had executive hair. Had charisma, but no actual ability hiding behind it.
If you're actually a source of economic value, taxes don't affect you as much as you'd think. Government takes, gives to the poor, makes them a bit richer, and they end up buying more of your product. There may not be a 1:1 correlation, but $1 in new taxes probably ends up being far less than $1 out of their pocket when all is said and done. It may even make you more money.
If, on the other hand, you're rich purely because of luck, then a higher tax rate affects you a lot more, because you can't count on the wealth you lose being recirculated to you. It will end up going to an actual value creator and not you.
That's why the Buffets and Gates of the world don't sweat higher taxes too much, and why you hear so much wailing and gnashing of teeth from Wall Street types over the very idea.
My 2 cents, anyway.
No, my problem is that all the government seems to want to do is find new ways to tax people..
"The" government? I pay taxes to more than one government. There's Federal tax, state tax, and local tax. As to the Feds, Federal taxes are lower than they've been in 60 years. TFA is a red herring; rather than taxing financial transactions, why not simply tax Capital Gains as income (as well as get rid of loopholes like the mortgage deduction and the charity deduction)? 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.
The stock market gambler should be paying twice the tax the roofer pays. The roofer is creating wealth, the gambler simply shuffles it around and leeches off of it. TAX WALL STREET.
Free Martian Whores!
It should not be limited to large trades.
Right now the high-frequency traders are basically stealing. They jump in front of other peoples' trades by milliseconds, holding no trade position at the end of the day. It has nothing to do with the purpose of a stock exchange. It does not create capital, value or liquidity. It's a hack, pure and simple, and it's costing the rest of us a ton of money by increasing volatility where there would otherwise not be volatility. They are the griefers of the financial sector.
All you'd have to do is make this a very small tax for it to have a very positive effect, both on the bottom line and on the health and stability of the marketplace.
Plus, since we're talking about a very small amount, it would not hurt all of the retirees who were suckered into 401ks and Roth IRAs instead of proper pensions.
You are welcome on my lawn.
The original Tobin Tax was targeting currency trading, but other economists since have proposed it for securities trading as well.
It tends to hit mostly the high-frequency traders and the big hedge funds who are constantly shuffling huge sums of money around. It has very little effect on somebody who makes a few trades a year as part of a smaller individual investment portfolio.
I am officially gone from
While I'm on the fence about the tax, I am definitely with you on making high frequency trading as difficult and least profitable as possible.
Most people know this and the only people who like high-frequency trading are those who profit from it directly. The markets work for these traders and these traders work for the markets.
Normal people and the companies listed on the markets are hurt by this arrangement. They would gladly take their business to another market that had more sane trading rules.
Which gets to the actual problem - regulations on securities markets. We have a classic example of regulatory capture here, so starting a competing market is effectively impossible. NASDAQ couldn't happen today.
Like anything else there needs to be a market in markets (sup, dawg), and this has been prevented from happening, so we wind up in this surrealistic position with markets that hurt most of its participants to enrich the very few (a net transfer of wealth). The 1% isn't just on Wall Street - their accomplices in Washington are essential to the mechanism.
My God, it's Full of Source!
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