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Pete Stark offers currency transaction tax bill

By Josh Richman
Tuesday, July 20th, 2010 at 2:12 pm in Pete Stark, U.S. House.

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.

It’s not a new idea; the late Nobel Laureate economist James Tobin was talking about something like this almost 40 years ago.

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.’ ”

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  • Elwood

    The men with the butterfly nets are after Pete, but he’s still pretty fast on his feet.

  • deadwood

    Elwood: Nice little rhyme. Men with butterfly nets? Well, if you call just about all the people of Alameda County “men with butterfly nets” I guess you would be accurate, because that’s who’s after Fortney “Pete” Stark. Why would any Democrat support such an elitist, contemptuous, stubborn old man. He most clearly does not reflect nor represent the people of the East Bay. Fortney “Pete” Stark is off his rocker and off his meds. He needs to retire. There is no chance this bill will pass.

  • Quando

    I am no fan of currency traders, but the last thing this country needs is a new tax to pay for world health initiatives while people are hurting in this country. Stark is off his rocker.

  • Mark

    This is a realy smart idea, actually… let’s be real about what’s screwing up our economy–it’s the crazy speculation on everything from houses to currency to the imagined value of a barrel of oil. The real economy doesn’t just trade dollars and euros back and forth to make money, it BUILDS, CREATES, and SUSTAINS things… and it helps contribute to the welfare of the world. The speculators don’t do any of this, and make billions every year, let’s at least get a little of that back?

  • http://ibabuzz.com tina

    Commie Stark needs to pack his bags and resign.

  • Kraig

    another obama slush fund

  • Kraig

    you guys in California are all a bunch of whacked out Socialist Hippie Commies. Thank God I left in time and am in God’s country — Texas…

  • Elwood

    Kraig, by leaving California you raised the average IQ of both California and Texas.

  • Jon

    Stark and his Progressive pals are fools. We need to worry about the USA not the world. We elect people to the US Congress-not the World Government.

    Hell, they may as well tax us each time we change underwear/panties and socks or stocking/panty hose?

    Where do they find fools like him?

  • thims

    The proponents of these various types of transaction taxes always refer to the Nobel Prize winner James Tobin and his Tobin tax. The Tobin tax was only an idea of Tobin. He would often tell his students that this type of tax would not work. Research what happened to Sweden when they tried the tax for only six years. Very destructive indeed. Maybe that is the whole point.

  • Jim

    Considerations: If the tax aplies to both parties to a transaction that doubles the effect of the tax. How long before I sell my house or auto am I taxed? Lets continue down the inevitable tax road: How about any transaction insturment ie. credit card transaction, deposits to bank or checking accounts, cash machines, etc. Don’t just assume that because this sounds stupid its not going to pass congress.

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