Thursday, August 30, 2018

1st Recommendation -- about a Financial Transaction Tax

I've been reading and thinking about how to encourage companies to hire more, pay more, and/or reinvest more in their companies, rather than doing stock buy-backs or dividend pay-outs. I've looked at a handful of ideas and I've settled on one (after getting some ideas from government and banking) to make a recommendation. It isn't necessarily the only recommendation I will make. It's only the first one.


I recommend a financial transaction tax of .0075% -- .01% on stock or bond transactions in the secondary markets (not for IPOs).

This should automatically begin (turn on like a switch) when the federal government debt-to-GDP ratio is greater than a percentage chosen by Congress (I recommend 40%) and automatically stop when below that level. Therefore, it would not sunset, but it wouldn't brainlessly continue forever.

The revenue from this would be dedicated to paying federal government long-term debt.


It would achieve several goals at once:

  • Add some cost to financial transactions, so that real investment and commerce are more attractive by comparison.
  • Raise between $750 million and $1 billion per $1 trillion of transactions for the government to pay off long-term debt.
  •  Make the use of stock buy-backs less appealing and therefore slowly turn off the spigot leading to corporate executives, while leaving the spigot on leading to real investments. This may help repair the long-term problem of the wealth gap.
  • Require all who use our markets and who have benefited from our government stability and strength to help solve our indebtedness problem.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.