We do, of course, live in a free society, meaning that any damn fool can propose anything they want. That we do live in a free society means that it is incumbent upon us, the people, to react to damn fool ideas from idiots. At which point here is something we must “Parp!” at. The idea that Covid means now is the time for a Financial Transactions Tax. The problem being that no time is the time for an FTT. It’s a bad tax, it shrinks the economy, lowers pensions, reduces, not increases tax revenue and generally has all the hall marks of an extremely bad way to try to pay for government.
This was all explained, by me, a decade ago, here. Nothing in that analysis has changed, it’s still a damn fool idea proposed by idiots.
But it has been revived as a proposal. That we know it’s a damn fool idea can be seen from the list of signatories:
Chair and Cofounder
Extinction Rebellion (UK)
Err, yes, such a great source of economic ideas, that lot.
Profesdor of Divinity Emeritus
The technical knowledge is likely to be high with that one.
New York, NY
The knowledge of optimal taxation theory should be strong there.
Professor of Accounting,
Sheffield U. Management School
Sheffield University (UK)
Ahh, proof perfect that it’s nonsense.
If you want the case against it is, again, here. Nothing they say changes any of that.
Within their current proposal though there is this gem of logical thinking:
While the proposed 0.1% tax rate on stock trades might not sound steep,
it does not need to be any higher to raise large revenues. Global stock
trading has recently been setting records. In 2020, for example, New
York’s top two exchanges, the NYSE and the NASDQ, registered nearly
$60 trillion in trades, nearly half the total volume of the world’s 85 stock
exchanges. At this pace, even this tiny tax on publicly-traded equities that
are transacted on G7 exchanges would easily (and quickly) start to
generate at least $50 billion a year for developing countries, over and
above Official Development Assistance (ODA).
It also helps to stem the
current plague of HFT abuses like “front-running,” “naked short
selling,” massive high-velocity fake bids that lead to no actual
transactions, and the kind of anonymous “synthetic equity” financing
that recently contributed to the Archegos collapse.7 Indeed, dampening
such chicanery, beyond just raising revenue, has long been the favorite
reason why leading economists like John Maynard Keynes and James
Tobin have supported FTTs.
Well, OK, synthetic equity is a method of avoiding FTTs, short selling, naked or otherwise, isn’t anything at all – literally, nothing – to do with HFT, nor is front running specific to HFT.
But to the logic there. Look how much money we can raise by taxing the current amount of HFT by just 0.1%! And look how much we’ll reduce HFT by taxing it by just 0.1%!
I really am not being unfair when I respond with Jeez, these idiots are so damn stupid.