by Ronald M. Glassman and Gerald E. Scorse / March 6th, 2019
With great fanfare, politicians on the left are thinking big on tax reform: a 70 percent rate on incomes over $10 million, a wealth tax on the super-rich, estate taxes as high as 77 percent. With no fanfare at all, the nonpartisan Congressional Budget Office (CBO) has made the case for thinking small. According to the CBO, a mini-tax on sales of stocks, bonds and other holdings could boost revenues by scores of billions a year.
The estimate came in December 2018 when the CBO released its list of options for cutting the federal deficit. For the period 2019-2028, a Wall Street tax of 0.1 percent would bring an extra $777 billion into the Treasury. Market declines were predicted early on, along with lower capital gains and lower trading volumes. Even so, after factoring in all the headwinds, the tax still produced average annual revenue increases of almost $78 billion. The numbers rose as the years went by: the inflow totaled $534.5 billion in the closing half-decade, compared to $242.2 billion from 2019-2023.
The tax is called a financial transactions tax, “FTT” for short. The United States had one from 1914 until 1965; it could be coming around again as lawmakers try to cope with “the defining challenge of our time,” income inequality.
Such a levy would instantly become the single biggest non-income tax on wealth in America. Five days a week and after-hours, the financial markets execute millions…