taxing wealth not work to pay for stock market bailout
Wall Street Journal (Deborah Solomon and Damian Paletta):
The financial sector made vast sums of money writing bad loans. The penalty for this is supposed to be that the people who wrote the bad loans lose the money. However, the negligence of the people in the financial sector was on such a scale that allowing the bad actors to lose their money would be devastating to the entire U.S. economy.
To let the normal systems of accountability to play out would harm the U.S. economy, we’re told by the financial experts of the government and private sector. Few of these experts had sufficient expertise to avoid getting into the current mess. But these experts are charge, so we (the citizenry) have to implement their fix for their problem, lest it become our problem.
What’s the fix? The people who fight regulation vehemently now want a government bailout. Rich people and their rich companies screw-up and now they expect the government to borrow money to bailout negligence. Of course this borrowing will be paid back by a combination of taxes on the middle class and cuts in services.
One of the main benefits of the bailout will be to protect the value of the stock market. I have a suggestion about making this bail out a little more fair.
The United States should implement a tax on the transfer of stock and other investment mechanisms. The tax would be quite small, perhaps 0.1% of the total transaction. This is far less than middle class investors are expected to give to the great investment houses when they buy stocks. It would be a small cost for middle class investors.
Taxing individual stock transactions would also cause investors to do more long-term strategizing, since it would be harder to make a quick profit on a stock.
I wasn’t a big fan of John Edwards, but I did like his line, “Tax wealth, not work.” If regular folk are expected to subsidize the greed of the rich, it seems reasonable to ask for a tax code that does more to tax wealth instead of leaving the debt to be paid by the middle class through their income taxes.
If I get sufficient positive feedback on this proposal, I will contact the candidates for federal office and see what they have to say about the proposal. Proviso Township includes some of four Congressional districts IL-03 (Dan Lipinski), IL-04 (Luis Gutierrez), IL-05 (Rahm Emanuel) and IL-07 (Danny K. Davis). Illinois' senior U.S. Senator (Dick Durbin) is up for re-election in November. And the following candidates for President of the United States will appear on Illinois ballots: Chuck Baldwin (Constitution), Bob Barr (Libertarian), John McCain (Republican), Cynthia McKinney (Green), Ralph Nader (independent), Barack Obama (Democratic) and John Joseph Polachek (New Party).
President George W. Bush warned that a "significant" amount of taxpayer funds will be put at risk with the government's plan to bolster shaky markets, but said intervention is necessary to keep the financial system from grinding to a halt. "This a pivotal moment for America's economy," Mr. Bush said Friday. "In our nation's history, there have been moments that require us to come together across party lines to address major challenges. This is such a moment."
Treasury Secretary Henry Paulson announced plans Friday to quickly set up a "bold" government program to take over troubled mortgage assets from financial institutions, along with other efforts to step up the purchase of mortgage-backed securities. "The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," Mr. Paulson said in prepared remarks for a press conference. (Read the full remarks)
The financial sector made vast sums of money writing bad loans. The penalty for this is supposed to be that the people who wrote the bad loans lose the money. However, the negligence of the people in the financial sector was on such a scale that allowing the bad actors to lose their money would be devastating to the entire U.S. economy.
To let the normal systems of accountability to play out would harm the U.S. economy, we’re told by the financial experts of the government and private sector. Few of these experts had sufficient expertise to avoid getting into the current mess. But these experts are charge, so we (the citizenry) have to implement their fix for their problem, lest it become our problem.
What’s the fix? The people who fight regulation vehemently now want a government bailout. Rich people and their rich companies screw-up and now they expect the government to borrow money to bailout negligence. Of course this borrowing will be paid back by a combination of taxes on the middle class and cuts in services.
One of the main benefits of the bailout will be to protect the value of the stock market. I have a suggestion about making this bail out a little more fair.
The United States should implement a tax on the transfer of stock and other investment mechanisms. The tax would be quite small, perhaps 0.1% of the total transaction. This is far less than middle class investors are expected to give to the great investment houses when they buy stocks. It would be a small cost for middle class investors.
Taxing individual stock transactions would also cause investors to do more long-term strategizing, since it would be harder to make a quick profit on a stock.
I wasn’t a big fan of John Edwards, but I did like his line, “Tax wealth, not work.” If regular folk are expected to subsidize the greed of the rich, it seems reasonable to ask for a tax code that does more to tax wealth instead of leaving the debt to be paid by the middle class through their income taxes.
If I get sufficient positive feedback on this proposal, I will contact the candidates for federal office and see what they have to say about the proposal. Proviso Township includes some of four Congressional districts IL-03 (Dan Lipinski), IL-04 (Luis Gutierrez), IL-05 (Rahm Emanuel) and IL-07 (Danny K. Davis). Illinois' senior U.S. Senator (Dick Durbin) is up for re-election in November. And the following candidates for President of the United States will appear on Illinois ballots: Chuck Baldwin (Constitution), Bob Barr (Libertarian), John McCain (Republican), Cynthia McKinney (Green), Ralph Nader (independent), Barack Obama (Democratic) and John Joseph Polachek (New Party).
Labels: taxation, Wall Street Journal
posted by Carl Nyberg at
5:14 PM
3 Comments:
Sounds like a good idea, Carl, but I'd like to hear someone argue the downside of it, too.
I'd also like to have all of the USG bad debt purchases be put on-line -- so those interested can examine just what kind of deal these deadbeat bankers are getting.
And maybe the Fed should disqualify anyone sitting on the board of those bailed-out banks from serving on another bank board for ten years or so.
Can you think of any other requirements the Fed should make before saving their stones?
We should spare them the pound of flesh -- but still -- that has to be a powerful disincentive for reckless behavior -- otherwise -- it happens again.
By
chris miller, at 3:21 PM, September 23, 2008
ms. coffee says: did you see Bill Clinton on the John Stewart show last night? He really had some good ideas about the bailout. Why doesn't congress listen to him?
By
Anonymous, at 7:47 AM, September 24, 2008
Over the hill says:
Why not tax stocks at the same rate as income or dividends and add on the Social Security and Medicare taxes to equal the taxes on working wages? The troubling aspect is where asset rich retired individuals would become poor quite quickly and no longer have a nest egg.
By
Anonymous, at 10:49 AM, October 04, 2008
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