Rally-goers endorse ‘Robin Hood tax’
Bill Barclay, a retired economist, collects petition signatures at the National Nurses United rally May 18, for a proposed tax on financial securities transactions. | Bill Dwyer~Sun-Times Media
Updated: July 2, 2012 8:25AM
NATO protesters this week invoked a legend with hopes of effecting economic parity.
Calling it the Robin Hood tax, marchers at the National Nurses United rally in downtown Chicago on Friday want the federal government to enact a tax on the transfer of financial instruments like stocks, bonds and commodities.
Bill Barclay, an Oak Park economist who worked for 22 years trading stocks and commodities in Chicago, knows a thing or two about the concept of taxing financial transactions.
At Friday’s rally, he said it’s past time for a tax to help pay for efforts to recover from the recession and protect social programs.
Other countries have had the tax for years, he said.
“We have these kinds of taxes in quite a few places around the world,” he said, ticking off a list: Austria, Australia, Chile, Brazil, Finland, Taiwan, South Korea, Hong Kong and the United Kingdom. And the state of New York, though officials there rebate the money back to traders.
“France is instituting one at the end of this summer,” he said. “In many respects, Europe is ahead of us on this. It works, and it raises significant amounts of money.”
Barclay (“like the bank”) said there are two reasons to institute a financial transaction tax here.
“It will cut down on activity you want to reduce and it will raise money to put people back to work and get the economy going,” he said.
Barclay said the government needs to discourage “short term, high volume trading” in which speculators hold onto stocks and other financial instruments for as little as 30 seconds.
“That kind of high frequency trading doesn’t do anything for the markets,” said Barclay. “It takes money out of people’s pockets.”
He said people who hold onto investment long term will feel little effect. “If you’re going to hold onto a stock for two, three, four, five years before you retire, that’s nothing.”
With a $14 trillion gross domestic product, Barclay said, every one tenth of 1 percent in financial transaction tax could raise $14 billion. Great Britain, he said, has a one-quarter percent tax, which would translate to $35 billion in the U.S.
A full 1 percent tax would raise $140 billion annually, he said.
“All it would do is take transaction costs back to where they were 10 years ago,” Barclay said. That’s when the markets were considered to be efficient and robust, without flash (market) crashes generated by these high frequency traders.
Barclay said opponents of the taxes — mostly the super rich — have no grounds to oppose the tax other than greed.
“Most of their arguments are just scare arguments,” he said. “They’ll say you’ll reduce market liquidity, but 10 years ago the experts all said the markets were liquid and efficient,” he said.
Fears that people will go elsewhere to trade are also groundless, he said.
“The United Kingdom has had this kind of tax for over 100 years,” he said. “They have the second largest stock market in the world, and the sixth largest economy in the world.”
“People haven’t left the UK to trade elsewhere.”