Here is another one of those not-so-publicly known facts as reported by Paul Buchheit on Alternet:
Just ducky, isn't it?
Sales tax on a pair of shoes: 6 percent. Sales tax on a credit default swap: 0 percentIt's enough to make the average person want to pull their hair out and gnash their teeth. Why is it that the poor and middle class seem to pay taxes on just about everything we need and use, yet the wealthy are allowed to shield so much of their largess from the tax man?
That's right. Speculators don't pay a penny in taxes for financial purchases, including the high-risk derivatives and credit default swaps that nearly wrecked our economy.
Throughout the country state governments are cutting school budgets, services for the poor, police departments, and funding for food pantries and homeless shelters and elderly assistance. And they're raising sales taxes and property taxes and local taxes and fees...
How much money could be generated through a financial transaction tax (FTT)? Economists Dean Baker and Robert Pollin estimated that a small FTT could generate $353 billion annually in the United States. In 2008 consumer advocate Ralph Nader said a tenth of a percent tax on all derivative transactions would raise $500 billion a year.So, there you have it. If I go to the store tomorrow and buy some toilet paper, I will have to pay sales tax on that purchase. However, if on the same day some filthy rich hedge fund manager spends one million dollars to purchase a credit default swap, he/she doesn't pay any sort of tax on that purchase at all.
That's more than three times the budget deficits of all 50 states combined.
And the revenue estimates are probably understated. The Bank for International Settlements reported that annual trading in derivatives had surpassed $1.14 quadrillion (a thousand trillion dollars!), with about half the trades occurring in the United States. That doesn't include the multi-trillion dollar stock and bond markets...
Just ducky, isn't it?
I was trying to play Devil's Advocate by asking myself, what would the drawbacks be to this sort of tax? I couldn't really come up with any. That may be a failure of imagination on my part, but from the article, it doesn't sound like opponents of the tax have any good reasons either, just the usual FROTHING AT THE MOUTH THAT ALL TAXES ARE BAD AND EVIL AND KILL JOBS AND BLAH BLAH BLAH.
ReplyDeleteA hedge fund manager pays taxes when they sell a credit default swap. It is called capital gain (or loss) tax. There are many ways and methods on how taxes are gathered. I live in Oregon where there isn't a sales tax but we are one of the highest taxed states. The author of this article makes it sound like there isn't any taxes being paid involved with a credit default swap. I guess you could come up with the same conclusion with us Oregonians because we don't pay a sales tax.
ReplyDeletecdogzilla,
ReplyDeleteMe either!
Mark (not Susan),
I lived in Oregon for nearly 14 years before moving to Washington, so I know all about Oregon's high tax rates. It always warmed my little cockles to know that my family paid more in state income taxes each year than Nike, Intel & PGE combined!!
While there might be a capital gains tax on the income portion, it is only 15% and many corporations and wealthy individuals are able to defer even that small amount indefinitely due to our nation's business-friendly tax policies.
Still, the point of the article is that average folks get taxed on their total income AND their purchases. The rich, however, can legally shield much of their income from the tax man and/or pay a smaller percentage than the rest of us AND, in many instances, they pay zilch on quasi-financial purchases.
That doesn't seem fair and equitable to me.
Hello GOD-Zilla, this is not-Susan :-),
ReplyDeleteFirst of all I want you to understand that I am neither a right or left winger. When I made my comment it was because I wanted to take away the embellishment of a very left slant by stating what is true. It wasn't about taking sides. If we take sides we ONLY see and interpret things from one (our) side of the coin. I learnt that when watching my daughter play high school basketball while angrily venting about the OBVIOUS bias that the referees had against our team. Then while talking to the parents from the other team they expressed the same identical complaint about the referees bias towards their team. I guess what I am saying is that we lean towards distorting the truth to comply to our belief. Then our distortion of truth becomes bigger than life's reality and we then live in that delusion to support our belief. What I want to know is the truth. That is a very hard undertaking mainly because of our tendency towards our own self-deceit.