A tax on currency transactions could both stablize our finanical system and pay for investments in global health, climate change mitigation and affordable child care, according to Rep. Pete Stark.
“Every day, there are $4 trillion worth of currency transactions,” Stark, D-Fremont, said in a news release. “The vast majority of these are speculative – banks trying to make a buck by out-guessing the system. This speculation contributed to the last Wall Street crisis and makes our financial system less stable.”
“The proceeds of a new tax on currency speculation will be used to provide billions in new funding for important global and domestic priorities. At home, this bill will give more money to affordable child care programs. Globally, it will contribute billions to climate change and world health programs,” added Stark, chairman of the House Ways and Means Health Subcommittee.
Stark’s H.R. 5783, the Investing In Our Future Act, would impose a 0.005 percent fee on the buying and selling of world currencies and on currency derivative transactions by a U.S. person, including domestic corporations, partnerships, subsidiaries of foreign corporations, and individual citizens and residents. Transactions under $10,000 are exempted from the tax. Stark says studies estimate that a worldwide 0.005 percent tax on dollar transactions would raise $28 billion a year and reduce speculative currency trading by 14 percent.
Among groups supporting the bill are ActionAid, Friends of the Earth, RESULTS, Health GAP (Global Access Project), Sustainable Energy and Economy Network at the Institute for Policy Studies, and Africa Action.
UPDATE @ 4:10 P.M.: Forest Baker, the Republican nominee to challenge Stark in November’s election, calls the idea “pretty crazy.” Though the .005 percent rate seems tiny, he said, it would be constantly compounding to ultimately cost currency traders a tremendous slice of their funds.
“That would never be tolerated by any of those entities, they would simply close those accounts, and that would then cripple the global financial capitalism mechanism of currency trading,” he said. “That would never happen, and Pete Stark has to know that. … It’s astounding to me that such a thing would even be proposed.”
The tax would be “astoundingly burdensome” both upon those on whom its imposed and for those administering it, Baker continued. “He can’t be that stupid, he’s got to be kidding us or playing politics. It’s possible one of his interns wrote that and he said, ‘Yeah, yeah, yeah, submit it.’ ”