As the March 1 deadline rapidly approaches for what has been termed the “Sequestration,” the majority of Americans seem unable to do anything other than sit idly by and wonder to themselves what programs and agencies will be cut under the guise of “balancing the budget,” “reducing the deficit,” and “cutting government spending.”
Unfortunately, by applying terminology to the latest “crisis” in Congress such as the “Debt Ceiling,” “Fiscal Cliff,” and now the “Sequester,” the mainstream media, along with the relevant government agents, major banks, and corporations, are able to hype the population into a state of hysteria and fear (for those that actually pay attention to anything other than the latest television show) so that the general public will be thoroughly convinced that the only way to avoid imminent disaster is to reach a compromise in the form of cuts, firings, and a general reduction of standards of living.
In reality, the creatively-named “Sequester” is nothing more than semantic jargon devised for purposes of the implementation of austerity measures against the American people. It is quite clear that, although the Sequester itself exempts many social safety net programs in terms of its automatic spending cuts pending a failure of Congress to reach an agreement, the social safety net is very much on the table in the course of those discussions.
While not openly labeled as Austerity measures, the growing cuts to the American social safety net and U.S. critical infrastructure coupled with alarming increases in taxes for low income to upper middle income workers should leave no doubt as to what is actually taking place within the United States. Although nomenclature and terminology may be different in the public discourse, make no mistake that Americans have much more in common with the Greeks, Spanish, Irish, and other Austerity victims than they may wish to admit.
Largely at the forefront of any budgetary discussion in the United States is the issue of government spending as it relates to programs such as Medicare, Social Security, Medicaid, Unemployment Insurance, Food Stamps, etc. – programs that have been given the politically charged name of “entitlement programs” in order to associate the spoiled child mentality with programs that have actually been funded by the taxes of working people during the course of an entire lifetime.
Constant propaganda from both pillars of the false left/right paradigm have contributed to the brainwashing of the American population regarding the programs mentioned above. Most notably, claims that the United States cannot afford to maintain a social safety net system without vastly increasing taxes or simply abolishing the program altogether are reported back to uninformed constituencies of both political parties to be parroted back to them in times of national debate in the form of mandates and demands.
From Libertarians who oppose social safety net programs on ideological grounds (as promoted by the Rockefeller family) and Conservatives who have money and expect to continue to have money (hence the lack of concern for anyone who may not enjoy their level of comfort at the moment) to Socialists who are willing to bleed the average citizen for everything he is worth (for little in return but that which government decides is appropriate) and Liberals who are willing to both fleece taxpayers and compromise the programs these taxes would allegedly go to support, it is clear that the working men and women of the United States and those who have been victimized by Wall Street parasitism and the folly of Free Trade are left completely alone and to themselves.
Yet, amongst all of the reasons put forward as justification for the dismantling of the social safety net, few mention the Wall Street bailouts and the $27 trillion worth of credit extended to bankrupt institutions under the concept of “too big to fail.” Likewise, few tend to mention the financial costs of administering a global war OF terror on virtually every continent or the development and maintenance of a police state here at home. Neither are the consequences of prosecuting an unbelievably stupid and non-productive War on Drugs discussed when it comes to questions of what should be cut from the Federal budget.
Instead, the talk immediately turns to the social safety net and the programs that are currently keeping millions of Americans alive.
Yet there is a more immediate and preferable way to address the concerns regarding the social safety net than any raise in taxes on an American population that is already taxed to death or by the dismantling of the social safety net system.
This new method of support for the social safety net system is as simple as the Wall Street Sales Tax, a move which would solve both the “crisis” of the social safety net as well as the general budgetary crisis at all levels of government in the United States of America.
The Wall Street Sales Tax should be applied at the rate of 1% to financial market transactions such as stocks, bonds, flash trading, e-trading, high-frequency trading, debt instruments, and the notional value of derivatives. A reasonable exemption of $1 million per person per year should be enacted in order to prevent the placement of taxes on individuals who shift around personal financial assets or make investments for their 401(k) or other retirement account. The 1% tax should be paid by the seller of the instrument, not the buyer, and the proceeds accrued from the tax should be split evenly between the Federal government and the States.
The following is a brief explanation of how this program would achieve such a lofty goal and how it should be implemented in order to achieve maximum effect. In short, it is the argument for the creation and implementation of the Wall Street Sales Tax.
The Case for the Wall Street Sales Tax
1.) Wall Street Pays No Tax
Wall Street banks are, by definition, corporations. However, like most major corporations that are supposed to pay a 35% tax on their profits, Wall Street banks pay almost none of the Corporate Income Tax. That is, many of them pay nothing at all.
For instance, according to statistics procured by Senator Bernie Sanders of Vermont and Citizens for Tax Justice, Goldman Sachs, one of the most infamous zombie institutions, only paid 1.1% tax on its total profits in 2008, the year of the worldwide derivatives crisis. Although Goldman Sachs actually earned a profit of $2.3 billion that year, it also received a $278 million tax refund from the IRS.
As Webster Griffin Tarpley points out, “This scandalous situation did not prevent Lloyd Blankfein, Goldman’s boss, from appearing on CBS television to demand draconian cuts in the meager entitlement payments received by the poor, the sick, and the old.”
In 2010, Bank of America (BoA)also paid no Corporate Income Tax even though it had earned profits of $4.4 billion. Yet it also received a tax refund from the IRS. In BoA’s case, however, the refund was to the sum of $1.9 billion. It should also be pointed out that BoA received over $45 billion from the U.S. Treasury and $1.3 trillion in zero interest credit from the Federal Reserve during the “financial crisis” of 2008. BoA was able to repeat their tax dodge again in 2011.
Likewise, Citigroup paid 0% Corporate Income Tax on $4 billion profits while Wells Fargo paid nothing for at least the years 2008, 2009, and 2010.
Another spectacular example of Wall Street’s tax dodges is General Electric, which long ago ceased being an industrial corporation and became a hedge fund in drag, built around its financial arm, GE Capital.
GE racked up worldwide profits of $14.2 billion in 2010, but managed to avoid the federal corporate income tax completely. Instead, GE accountants were able to secure a $3.2 billion refund from the US Treasury. This happened even though GE was laying off 21,000 US workers and closing 20 US factories over the years 2007-2009.
And these results were typical of GE’s performance over the most recent decade: GE paid a 2.3% tax rate on profits during 2002-2011, and succeeded in paying zero federal corporate income tax in 2002, 2008, 2009, and 2010 (See Citizens for Tax Justice and Jake Tapper, “General Electric Paid No Federal Taxes in 2010,” ABC News, March 25, 2011).
The scandal is made even greater because GE boss Jeffrey Immelt was serving as Obama’s business liaison in his capacity as Chairman of the White House Council onJobs and Competitiveness. Rapacious predators like Immelt apparently believe that good corporate citizenship starts with evading all taxes.
All of this open tax evasion is, of course, contrasted by the meticulous methodology used to fleece the average American taxpayer for every single cent possible.
However, aside from the obvious personal income/corporate income discrepancy, Wall Street banks also pay no sales tax on their immense number of transactions that occur in the form of derivatives, stocks, bonds, debt instruments, and other so-called “financial products.”
This, of course, is in direct contrast to the fact that individual Americans pay anywhere from 6% to 12% on transactions involving a variety of goods ranging from entertainment to necessity, even groceries in some areas, depending on the state.
As Tarpley writes in this regard,
This outdated approach goes back to when the stock and bond markets were considered capital markets. But today, in the ear of high frequency trading and flash trading in which one computer can carry out a million traders per second using algorithms, we are obviously dealing with a high-tech gambling casino that poses grave dangers to the public.
In short, the greatest single flow of untaxed money is the stocks, bonds, and derivatives which cross the exchanges in New York and Chicago, as well as the over-the-counter derivatives which are contracted behind the scenes. If sacrifices are required, this is obviously the place to start.
Obviously, when the suggestion is made regarding the implementation of a tax on such a wide variety of financial instruments and such a powerful cartel of corporate and banking interests, the next logical question turns toward the possibility and method of successful implementation.
Thus, it is important to note that between the years of 1914 and 1966, the U.S. Federal government did successfully implement a financial transaction tax of between 0.04% (0.0004) and 0.1% (0.001). Although the amount of tax percentage is much smaller than the 1% being discussed in this article, the ability of the Federal government to operate and maintain such a tax is clearly demonstrated.
Indeed, current tax policy shows that the U.S. Federal government is still capable of maintaining a tax on financial transactions as the Section 31 fee, a minute tax of 0.0034% on stock transactions is used to fund the Securities and Exchange Commission (SEC). In 1998, this amazingly small tax brought in $1.8 billion to fund the SEC.
New York State even has a very small financial transaction tax on their law books that brings in close to $25 billion per year according to some estimates but, ever since the 1970s, all of the money earned by this tax is given straight back to the Wall Street bankers due to threats made by financial institutions that they will move their operations to another state in order to avoid the tax. It should be pointed out, of course, that a nationwide Federal tax would effectively neutralize any threats by financial institutions to move outside of New York or any other state in order to negotiate lower or no taxation.
Another important point is that, for the most part, financial instruments such as stocks, bonds, futures, options, and indices (and virtually all of their other various incarnations and combinations) are traded through public exchanges. Thus, they can easily be tracked for the purposes of taxation.
Yet, as Webster Tarpley points out, “the real mother lode of transactions is to be found in the area of derivatives.”
Unfortunately, because the main applicable legislation in regards to “over-the-counter derivatives,” the Dodd-Frank Bill, fails to force the institutions and individuals engaging in such trades to report them, it is somewhat harder to determine the actual amount of these instruments. This is also partly because “over-the-counter derivatives” “take the form of private contracts between counterparties.”
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Thus, due to the lack of reliability on the exact number of these instruments, it should be specified that the 1% Wall Street Sales Tax should be paid by the seller, not the buyer. Furthermore, it should be specified that any over-the-counter derivatives contracts for which the 1% Wall Street Sales Tax has not been paid cannot be enforced in a court of law. This would effectively mean that, if the seller of an over-the-counter derivative does not pay the 1% Wall Street Sales Tax on his product, the buyer that loses out on the derivative would then be able to legally back out of the deal with the backing of the law, thus turning the tax-dodging seller into the ultimate loser.
According to Webster Tarpley’s estimates, world derivatives currently stand “in excess of two quadrillion dollars in notional value.” Other estimates put the notional value of derivatives in the range of six to seven quadrillion dollars due to the fact that these derivatives are constantly being bought and sold.
Thus, the revenue that would be generated from a 1% Wall Street Sales Tax could be expected to reach a figure of approximately tens of trillions of dollars.
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Of course, any new form of taxation on the trading of financial products would more likely than not cause the amount of trading currently taking place to go down )with some possibly ceasing altogether). Even in this event, it is reasonable to assume that the Wall Street Sales Tax would still provide several trillion dollars in tax revenue.
2.) The Wall Street Sales Tax Discourages Dangerous Forms of Speculation
As mentioned above, the implementation of a 1% Wall Street Sales Tax would naturally cause the amount of trading of the affected financial instruments to go down. It is even possible that the trading of some exotic forms of these instruments may cease altogether. But, while this may seem to present a problem in terms of reduced tax revenue, this should largely be the only concern. Even so, as mentioned previously, the expected revenue of the 1% Wall Street Sales Tax is still in the figure of several trillion dollars.
Still, it is fundamentally important to understand that the reduction in derivatives trading, computer-based transactions, and speculation is by no means a negative development. After all, it was derivatives that were responsible for the 2008 financial crisis that has spread and continues to spread concurrently across the entire globe. Financial speculation has been responsible for the rise in consumer prices in staple goods and as well as those goods that have become virtual necessities in today’s society. In addition, debt instruments have been instrumental in attacking the currency and economic stature of sovereign nations.
Thus, if the trends of speculation, derivatives trading, computerized transactions, and debt instruments are reduced or even eliminated, one would be hard-pressed to provide a clear and convincing argument outside of the most militant ideology that could justify their return. Even in the unlikely event that projected tax revenue does not reach the levels estimated in this article and by economists such as Webster Tarpley, the reduction in the financial instruments listed above should itself be considered a positive outcome.
As Tarpley writes, “A society which taxes the sales of industrial manufacturing and agricultural products, but which establishes a tax exemption for speculation, derivatives, and financial services has tilted the playing field in favor of a parasitical casino economy of the type which has historically led to widespread immiseration and recurring financial panics.”
3.) The 1% Wall Street Sales Tax Is Completely Constitutional
Acknowledging the many legitimate issues taken with the Income Tax by individuals across the political spectrum, the fact is that the Constitutional question of taxation is not applicable to the 1% Wall Street Sales Tax. Although the 16th Amendment clearly allows for the collection of an income tax, there does exist some controversy as to whether or not the individual is required to pay this tax by law. Setting that issue aside, however, there is no controversy surrounding the Constitutional applications of the various Sales Taxes currently in effect.
Article 1, Section 8, Clause 1 of the U.S. Constitution clearly enumerates the ability of Congress to impose such taxes. It states, “The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”
Thus, the 1% Wall Street Sales Tax exists well within Constitutional boundaries. Any challenges to the 1% Wall Street Sales Tax would effectively seal their own fate before getting off the ground due to hundreds of years of legal precedent and clearly defined (in this regard) cases of imposed taxation. In the case of the 1% Wall Street Sales Tax, there is no legitimate Constitutional or legal argument against its implementation.
Any individual that argues against the implementation of the 1% Wall Street Sales Tax, without subsequently arguing for the removal of all forms of taxation, is essentially lobbying for a double standard between individual citizen laborers and Wall Street Parasites. To agitate against the Wall Street Sales Tax is to agitate for taxation on the transactions of the poorest citizen while, at the same time, providing a free ride for rich bankers and vampiric financial institutions. This agitation, if realized, would entirely remove the burden of funding the Federal and State governments off the shoulders of the wealthy Wall Street bankers and thrust it onto the backs of the poor, working, and middle class alone.
Those individuals who state their undying respect and love for the U.S. Constitution should recognize the 1% Wall Street Sales Tax as an opportunity to both reduce the Federal and State budget deficit as well as the influence of Wall Street in a clearly Constitutional manner.
4.) The 1% Wall Street Sales Tax Largely Solves the Budget Deficit and Social Safety Net Funding Crisis
The Congressional Budget Office has estimated the U.S. Federal Budget Deficit at the end of 2012 at close to $1.1 Trillion dollars. In addition, each U.S. state maintains a budget deficit (with the exception of Alaska, Arkansas, Montana, North Dakota, West Virginia, and Wyoming) measured in the millions to billions of dollars. As reported by Stateline, the news reporting agency of the Pew Charitable Trusts, the total of all State budget deficits combined equals $111.9 billion.
However, while a $1,112,000,000,000.00 American budget deficit at first sounds like an impossible number to bring under control, one must bear in mind the estimates of just the initial revenue from the 1% Wall Street Sales Tax. As mentioned above, such proceeds are conservatively projected to reach the level of several trillions of dollars. More optimistic and even perhaps more accurate estimates suggest revenue in the range of tens of trillions of dollars.
With proceeds of these numbers divided evenly between the Federal government and the States, both the Federal and State budget deficits could be eliminated after the first intake of revenue is completed, all without cutting and gutting the social safety net, reducing military spending, or slowing the operation of government agencies. With the proceeds of the 1% Wall Street Sales Tax flooding the coffers of Federal, State, and Local governments, proponents of Austerity measures could then be seen as the irrational pro-monopolistic agitators that they are.
5.) The 1% Wall Street Sales Tax Is The Best Option
Broadly speaking in terms of the social safety net programs and Federal and State budget deficit issues being discussed during Congressional sideshows such as the “Sequestration,” the 1% Wall Street Sales Tax is not only the best option in terms of convenience, fairness, and positive results, it is the only method capable of actually achieving the goals for which it is created. Competing approaches either fail to achieve the necessary revenue, levy unfair taxation, or produce results which are entirely counter to any rationally desired outcome.
The most obviously abhorrent method of reducing or eliminating the budget deficit and managing the funding of the social safety net is that of Austerity. This approach is, essentially, the cutting of services, government labor, and government spending which is more often than not accompanied by an increase in the taxes of the lower, working, and middle class. Even aside from the desired results and moral implications of such a program, Austerity measures are inherently foolish in terms of reducing deficits and funding programs in that this method has failed on every occasion where it has been implemented. In reality, Austerity measures only create bigger budget deficits and financial crises in the next fiscal year. Regardless of the success or failure of Austerity, however, such methods are the antithesis to those who desire a rational, civilized society. Any discussion of Austerity must immediately be dismissed as foolishness and insanity.
Likewise, any discussion of raising the income tax or the implementation of a Federal Sales Tax (other than the 1% Wall Street Sales Tax) should immediately be abandoned. Higher taxation on an already overtaxed citizenry will only serve to reduce the amount of economic activity in the long run and to further burden those suffering the most in what can only be described as a worldwide economic depression. Propositions such as the Fair Tax should be included in this delineation as they are by nature regressive taxation and impose heavier burdens on the poor, working, and lower classes. These types of taxation cut only into the amenities of the rich but cut deeply into the necessities of the poor despite tools like the “prebate” discussed by proponents of the Fair Tax.
In the same vein, a Wealth Tax, like the one being proposed by various sources such as David Altman of the New York Times, presents numerous undesirable effects in addition to falling short of attaining any real revenue. Any program that would require such an extensive census of personal wealth and taxable assets is not only bound to face innumerable Constitutional challenges, it will require a virtual police state to enforce and administer. Regardless, it is also a fact that wages are much harder to hide from government investigation than other forms of income and assets such as those favored by rich elitists who are able to hide their assets away in various offshore accounts, funds, and foundations, thus continuing to leave massive loopholes for Wall Street parasites and wealthy financiers while cracking down upon the average American worker. Even if the Wealth Tax is able to accrue the optimum amount of money its proponents argue it can deliver, it pales in comparison to the 1% Wall Street Sales Tax in that it could not exceed over several hundred billion dollars of yearly revenue. The 1% Wall Street Sales Tax on the other hand, is estimated to rake in several trillion in revenue at the very least.
It should also be pointed out that the 1% Wall Street Sales Tax is the only option that actually discourages dangerous speculation and encourages tangible production.
The United States now finds itself in an unmistakable crisis situation. Caught in the grips of a worldwide economic depression, the U.S. now faces the perils of imperialism abroad and the imposition of a police state at home. In addition, the United States faces increasing economic destabilization, unemployment, fraudulent food shortage, health and healthcare crises, environmental degradation, and the ultimate collapse of the availability and the ability to provide for the basic necessities of life. In short, the United States (along with the rest of the world) is facing the very real possibility of a complete collapse of civilization as we know it and subsequent imposition of Fascism on a global scale.
As Greece, Spain, Ireland, and many others continue to be hammered by Austerity measures, the United States is falling prey to the same philosophies and political smokescreens. Yet, the United States stands at an even greater disadvantage than its European counterparts due to the fact that Americans are unfortunately still unable to understand the nature and dangers of Austerity. Thus, the dismantling of what was once the economic powerhouse of the world is taking place virtually unbeknownst to those who stand to become its greatest victims.
However, there are solutions readily available whenever there exists the will to take hold of them.
In relation to the crisis of the social safety net as well as the U.S. and State budget deficit, that solution exists in the form of the 1% Wall Street Sales Tax.
Most of the current American financial quagmire can be traced back to the antics and schemes of Wall Street at some point or other. The lack of adequate funding for the U.S. government can be directly related to the fact that the burden of funding falls on the backs of the poor, working, and middle class while Wall Street pays nothing. This free ride afforded to Wall Street must end.
The 1% Wall Street Sales Tax is the sole method that can attract revenue in the range of tens of trillions of dollars capable of fully funding the social safety net and the U.S. government as well as effectively eliminating the budget deficit at the Federal and State levels. All of this while discouraging dangerous forms of speculation and derivatives trading. Contrary to many other proposals being floated in the public arena by often questionable sources, the 1% Wall Street Sales Tax is entirely Constitutional.
Support The 1% Wall Street Sales Tax
While the concept of taxing Wall Street turnover has been circulating for some time, the credit for the revision, fine tuning, and detailed articulation of the 1% Wall Street Sales Tax should largely be given to Webster Griffin Tarpley.
Currently agitation for the 1% Wall Street Sales Tax is being undertaken most notably by the United Front Against Austerity, a coalition of a wide-ranging organizations attempting to inject and promote economic solutions based upon the American System of Economics, independent of the false left/right paradigm and the two existing major parties.
Contrary to what many popular and pessimist economists say, the U.S. and world economies can return to booming economic growth within two or three months. Contrary to what the Malthusian global elites espouse, there can be plenty of food, clothing and shelter for everyone once we support skilled labor and the production of real goods rather than cancerous financial speculation.
Indeed, the solutions are there for the taking. However, since the political will does not currently exist among elected politicians and the Corporate Government system obviously does not want to see them implemented, it is up to the American people to demand that the 1% Wall Street Sales Tax immediately be enacted.
Idle spectatorship is no longer an option. Active participation is the only legitimate path to take.
The reader is encouraged to visit the United Front Against Austerity website at www.againstausterity.org
Notes: Tarpley, Webster Griffin.. 3rd Edition. Progressive Press. 2011. P.151 Surviving the Cataclysm: Your Guide Through the Greatest Financial Crisis in Human History
Read other articles by Brandon Turbeville here.
Brandon Turbeville is an author out of Florence, South Carolina. He has a Bachelor’s Degree from Francis Marion University and is the author of three books, Codex Alimentarius — The End of Health Freedom, 7 Real Conspiracies, and Five Sense Solutions and Dispatches From a Dissident. Turbeville has published over 190 articles dealing on a wide variety of subjects including health, economics, government corruption, and civil liberties. Brandon Turbeville’s podcast Truth on The Tracks can be found every Monday night 9 pm EST at UCYTV. He is available for radio and TV interviews. Please contact activistpost (at) gmail.com.