In an open letter published Thursday, 52 professionals from the financial sector urged the U.S. Congress to pass legislation mandating a tax on financial transactions.
The tax would cover stock trading, derivatives and other financial instruments, but, proponents say, would have a significant impact only on so-called high-frequency trades, in which computer-driven speculators typically hold stocks for mere milliseconds.
“These taxes will rebalance financial markets away from a short-term trading mentality that has contributed to instability in our financial markets,” the letter stated. “The primary role of financial markets is to raise investment, allocate resources efficiently, and mitigate risk. However, much of today’s financial activity does not contribute to these goals.”
Several European countries are currently considering similar moves, with European finance ministers set to vote on broad action on Friday. Countries that have already instituted some form of financial transaction tax (FTT) include Hong Kong, India, Singapore, Switzerland and the United Kingdom.
In the United States, the tax proceeds – in the tens of billions of dollars – could be used in a variety of ways. Many on the international scene are calling for such revenues to go to the world’s poorest and to those countries worst affected by climate change.
The letter’s signatories, in a notable break from the sector, include seven former executives of Goldman Sachs and JP Morgan, two of the United States’ largest players in the financial services industry. They also include several hedge-fund operators and four current and former heads of European banks.
“Whether agreed by the G20, EU, or by individual countries”, the letter noted, an FTT “offers a real opportunity to help restore the financial sector to its proper role, while raising massive revenues for people ...