Quote from tortoise:
Slowly chunking my way through this beast. Completed a draft of one content page, "Let's Talk Tax!"
Comments, for better or worse, welcomed.
http://financialtransactiontaxes.com/LetsTawkTax.html
Following is information I've collected. Use any way you like. Also sent via your website. Hope you got it.
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The Swedish experience (1984-1991) with the FTT resulted in lower GDP and increased unemployment. Most of the tax fell on retail investors and very little on financial institutions (many of whom either went out of business or left the country). Only 3% of the projected FTT revenues ever materialized (a source of considerable embarrassment) and the tax was a
net loss to the Swedish Treasury. The FTT was repealed in 1991 after it destroyed much of Swedenâs financial industry. On September 16, 2011, Anders Borg, the Swedish Finance Minister, said: âWe have substantial experience in Sweden...And from the Swedish perspective, we cannot foresee that we would introduce such a tax in our system again."
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The FTT has been studied extensively in the US, Canada and Australia where the tax has been rejected because itâs projected to contract GDP, increase unemployment and place most of the burden on retail investors rather than financial institutions. Most recently, the EU Commission's official 1200 page âImpact Assessment Reportâ for the FTT says the following:
1. The FTT will cause EU GDP to contract, yielding an annual negative 1.8 percent GDP (or an annual GDP loss of 221 billion Euros)
2. Result in a loss of 500,000 EU jobs
3. Result in a loss of 110 billion Euros in income, VAT and business tax revenues (from the contracting economy and lost jobs)
4. Raise 57B Euros in Financial Transaction Taxes while LOSING 110B Euros in income, VAT and business taxes -- resulting in a NET LOSS of 53B Euros each year
5. Most of the net economic burden falls on individuals (from job losses) and non-financial businesses (from economic contraction)
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The United States Treasury Department studied the FTT and concluded that most of the tax falls on retail investors and very little on financial institutions. Lael Brainard, Treasury Department Undersecretary for International Affairs, recently said:
âWe're very much in sync with Europe on their goal of ensuring that large financial institutions bear their fair share of the burden, but the US-proposed 'responsibility fee' would better deter the kind of risky behavior that led to the crisis as well as ensure that large financial institutions and not retail investors bear the burden."
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Supporters of the FTT often tout the success of the UK âstamp tax,â but fail to disclose that most banks and investment firms do not pay the tax. Over 70% of all London Exchange transactions pay no stamp tax, and 100% of all other transactions (e.g., trades on the CME or NYSE) are also exempt. Of all the transactions that originate in the UK, fewer than 3% are subject to the stamp tax. If all transactions were taxable, financial firms would exit London in droves. ICAP, with over 2000 employees in London, recently announced that they will leave the city if the FTT is implemented in the UK. Scores of other financial services firms will follow right on their heels. If these firms relocate, London would lose billions in economic activity, billions more in income taxes and capital gains taxes, and 30,000-50,000 jobs.
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Current state of the Financial Transaction Tax (FTT):
1. EUROPE
The European Union's "Impact Assessment Report" of the proposed EU FTT showed that it would reduce EU GDP, cost hundreds of thousands of jobs and would actually decrease total tax revenue collections because taxes lost from the contracting economy and decreased employment would be greater than the FTT taxes collected. The Czech Finance Minister called the tax "economically irrational." The Swedish Finance Minister rejected the tax and said that Sweden would not participate. The UK, Ireland and Malta have also stated their intentions to oppose the FTT.
2. THE UNITED STATES
(a) The Obama administration came out against the FTT saying that treasury department studies showed that most of the cost would be borne by retail investors and not financial institutions. The Obama administration is proposing a tax that imposes fees directly on financial institutions based upon how much risk each bank puts into the financial system. Lael Brainard, Treasury Department Undersecretary for International Affairs, recently said: âWe're very much in sync with Europe on their goal of ensuring that large financial institutions bear their fair share of the burden, but the US-proposed 'responsibility fee' would better deter the kind of risky behavior that led to the crisis as well as ensure that large financial institutions and not retail investors bear the burden."
(b) Peter Defazio recently introduced FTT legislation in the House of Representatives. However, it was only able to attract 12 co-sponsors and is unlikely to get out of committee for a vote in the Republican-controlled House. Tom Harkin introduced similar legislation in the Senate, but with Democratic stalwarts Dick Durbin and Charles Schumer likely to support the Obama plan, Harkinâs legislation will have difficulty gaining traction in the Senate.
3. THE WORLD (G20)
Eleven of the G20 nations have said ânoâ to the FTT. These countries include: the US, Canada, Mexico, the UK, Australia, China, India, Russia, Saudi Arabia, Indonesia and South Korea. In addition, Argentina and Brazil said they will only support the FTT if itâs world-wide, including Switzerland, Hong Kong and Singapore, all of whom have said they will not introduce any new transaction fees or taxes into their financial system. Japan and Italy have expressed reservations and are unwilling to commit to the FTT at this time. Among the G20 members, only Germany, France, Turkey and South Africa unconditionally support of the FTT.
