If you're a 99 percenter and think something called a "Robin Hood tax" sounds like a good idea, what better time to don a mask and a pointy-topped hat than on the day JP Morgan Chase CEO Jamie Dimon gets grilled by Congress?
Mr. Dimon might have become the new symbol of corporate profligacy when his company lost some $2 billion in stock trades, but Occupiers on Tuesday dreamed of socking his Wall Street brethren with a much bigger number. Say, $100 billion.
If Congress were to pass a financial transaction tax – a.k.a. the Robin Hood tax – the "rich" (stock- and bondholders) would lose a small percentage of every trade, which would be given to the "poor" (insert your cash-strapped federal program here). All without adding a cent to personal income taxes.
Its backers – including actor Mark Ruffalo, Rage Against the Machine’s Tom Morello, and Coldplay’s Chris Martin – appear in a video drawing masks and hats on dollar bills. In front of the JP Morgan Chase headquarters in New York Tuesday, a group of about 40 activists (and one dog) also dressed in Robin Hood attire tried to drum up public support.
"As a democracy, I think it’s what we want, but the people who would be taxed are the most powerful people in the country,” says Michael Kink, executive director of Strong Economy for All Coalition.
Unfortunately for Tuesday's would-be Robin Hoods, Washington is no Sherwood Forest. Republicans on Capitol Hill are against any tax increases, and even potential allies such as President Obama and Treasury Secretary Tim Geithner have said the tax wouldn’t be feasible.
Critics say taxing financial transactions could move all that Wall Street business offshore and would be more likely to affect individuals’ retirement savings than financial traders. Obama administration officials have said that it would be ineffective.
“Academics tend to be big supporters of this – back when he was an academic Larry Summers was a big proponent of this, but he changed his mind” when he became Treasury secretary, says Pete Davis, an economist who advises Wall Street on financial legislation.
Advocates are talking about between a 0.5 and 0.005 percent tax on every transaction, but those numbers add up quickly. The tax would generate more than $300 billion a year if there was no reduction in trading, according to a study by the Center for Economic and Policy Research. Different proposed versions of the tax have more modest estimates.
When Sweden enacted a similar tax, traders moved to the London Stock Exchange and the volume of trading declined significantly, says Shelly Antoniewicz, senior economist with the Investment Company Institute (ICI).
“We view [the taxes] as being more harm than good, the side effects or negative consequences would outweigh the benefits,” she says.
ICI has a letter to Secretary Geithner on its website, stating its opposition to a transaction tax.
Robin Hood activists tried to do the ICI one better.
“I knocked on Tim Geithner’s door, but he didn’t answer," says Bobby Tolbert, an activist in New York Tuesday who went to Washington last week to try and generate interest in the tax plan. "We just wanted to deliver a letter to him, but the Secret Service stopped us.”
Still, Mr. Tolbert's merry band can claim at least one small victory.
Quoth he: “As we were leaving, a neighbor told us that they would deliver the letter for us.”