AFR Press Statement: President Obama and Treasury Secretary Geithner Urged to Support Financial Transaction Tax

DATE: October 28, 2011      

CONTACT: John Carey at 202-466-1854          

President Obama and Treasury Secretary Geithner Urged to Support Financial Transaction Tax

Washington, DC – Today, Americans for Financial Reform sent a letter to President Obama and Secretary Geithner requesting that they “urge the Joint Select Committee on Deficit Reduction to examine a small levy on financial speculation as a revenue-raising measure.”

On Tuesday, in advance of next week’s G-20 meeting in France, the European Parliament called on the G-20 to conclude discussions “without further ado” on the basic components of a global financial transaction tax, setting the stage for an important discussion of transaction taxes at that meeting.

Excerpt from the letter:

“The deficit problem that the Select Committee must address was to a significant degree created by the world financial crisis, a crisis caused by Wall Street speculation. It is therefore appropriate that we call on Wall Street to help address it.  A small tax on financial market transactions has the potential to raise significant revenue and simultaneously limit reckless short-term speculation that can threaten financial stability.

The idea of a small fee on the sale of financial instruments like securities and derivatives is not a new one. Such taxes have a long track record both in the United States and globally. The United States had a transfer tax from 1914 to 1966, which levied a small fee on all sales or transfers of stock. The UK levies a transaction tax of one half-percentage point on stock transfers and has done so for many decades. Asian countries such as Hong Kong, Taiwan, South Korea, and India also currently levy securities transaction taxes. The European Union is currently proposing a tax of one-tenth of one percent on the trading of shares and bonds, as well as a smaller tax on derivatives transactions. The French and German governments have already endorsed this idea.

Numerous bills have been introduced in Congress utilizing a financial transaction tax mechanism. In the 111th Congress these included S. 2927 (Harkin) and HR 4191 (DeFazio), while in the current Congress they include HR 870 (Conyers), HR 755 (Stark), and HR 2003 (DeFazio).

Over 1,000 economists recently signed an open letter advocating a financial speculation tax ‘technically feasible’ and ‘morally right.’ They join a long list of historically prominent economists — including Nobel Prize winners like James Tobin and Joseph Stiglitz — who have endorsed the idea of a transaction tax as a valuable tool to discourage high-volume speculative trading that serves no useful social purpose.

Today, three years after the financial meltdown and a taxpayer bailout, bonuses on Wall Street are back at sky high levels. At the same time, the rest of the country is suffering from terrible unemployment and rising poverty. It is both fair and practical to call on Wall Street to do more to aid the recovery.”

Click here to view the full letter to President Obama and Secretary Geithner. This letter follows an earlier letter from AFR and more than 100 other organizations sent to the Joint Select Committee on Deficit Reduction co-chairs Senator Patty Murray and Representative Jeb Hensarlingclick here to view that letter.