Assessing The Robin Hood Tax.

With the so-called “Fiscal Cliff” looming, Democratic Perspective hosts, Mike Cosentino and Steve Williamson, examined one of the most promising options for raising revenue – the Financial Transaction Tax (AKA The Robin Hood Tax).

The tax is supported by a thousand economists along with Warren Buffet and Bill Gates. Additionally, the tax already exists in 28 countries. The latest to begin implement ing the tax is France. Even the Vatican supports the idea.

The .5 percent tax would not affect normal bank activities, so it would have little effect on ordinary people. Mostly, it will impact high-speed trading – the trades made by computers to take advantage of minor fluctuations in share prices. Not traditional “buy and hold” investments.

Previously, the tax was proposed in the US House of Representatives by Rep. Chaka Fattah of Pennsylvania but never got out of committee. A similar bill was also proposed in the Senate by Senator Tom Harkin of Iowa. Again, it never got out of committee. But similar bills have surfaced again in both houses of Congress.

Details are yet to be worked out, but the Center for Economic and Policy Research estimates that a financial transaction tax could generate $177 billion per year. Other estimates say it would raise about 20 times the amount of revenue that would be collected from the so-called Buffet Rule which would allow the Bush tax cuts expire for those with adjusted incomes of $250,000 or more.

Even though, there has been little political will to institute the transaction tax as yet, the idea is gaining steam. The biggest obstacle is that it opponents feel that it must be global – that all of the world’s advanced economies would have to adopt the tax. Otherwise, they fear, investors would just move their investments to countries without the tax.

But since nations such as Argentina, Austria, Brazil, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Portugal, South Africa, Slovenia, Spain and Venezuela support the tax, it would seem that it is close to becoming a reality.

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