Bob Herbert has a good column today repping an idea from our friend Dean Baker: Let's put a small tax, around .25 percent, on the sale of financial assets like stocks, bonds or even mortgage-backed securities. The tax wouldn't have a big effect on most people, who don't change their portfolio often, but it could act as a deterrent for speculators who buy and sell these instruments several times in a day. As Baker points out, speculators aren't adding any real productivity to the market but could spur another damaging bubble that increases economic output but doesn't increase a majority of citizens' personal wealth. It could also, more importantly, raise around $100 billion for the government at a time when most agree that other tax increases would be detrimental to encouraging the economy to grow but worries about the federal deficit and national debt are also rising.
The politics of this kind of measure are extremely difficult, given the clout of the financial industry in Washington, but listening to arguments against it from the same people who think gutting Social Security is a wise long-term fiscal move would certainly be entertaining. Not, though, as entertaining as this, also from Herbert:
Incredibly, President Bush and Congress cut taxes in wartime, which is insane.
Refreshing!
-- Tim Fernholz
