The IRS Should Go Where the Money Is: Wall Street

Representative Keith Ellison held a press conference yesterday outside the Capital building in Washington, D.C. to announce the reintroduction of a bill that would tax financial transactions on Wall Street. The Inclusive Prosperity Act, which was first introduced last year and is supported by many economists, would implement a 0.5 percent tax on speculation and derivates and would reel in more than $300 billion a year in revenue.

The additional revenue, Ellison says, would make sure that jobs, housing, healthcare, education, and green energy did not continue to deteriorate in light of austerity. 62 percent of Americans support a tax on financial speculation and derivatives while 80 percent support raising taxes generally on corporations.

The European Union has already approved the implementation of a transaction tax in eleven of its countries including France and Germany. The tax is expected to generate €35 billion each year for the eleven countries while also protecting the public from another credit crunch.

The United States “isn’t broke,” says Ellison. “We’ve got plenty of money. It’s just not in the hands of the American people because the people with so much of the wealth bought lobbyists and influence to get loopholes for themselves so that they would not have to pay for the civilization that is America."

Many in Congress have endorsed the passage of the bill—Earl Blumenauer (D-Oregon), Judy Chu, (D-California), John Conyers (D-Michigan), Barbara Lee (D-California), James McGovern (D-Massachusetts) and Delegate Eleanor Holmes Norton (D-District of Columbia)—as well as from advocacy groups including National People’s Action, National Nurses United, HealthGAP and Friends of the Earth.

We have a revenue crisis in America,” says executive director of National People’s Action George Goehl. “The good news is we know where the money is. It’s not in grandma’s social security check. It’s not in grandpa’s Medicare. It’s not in our children’s classrooms. It’s on Wall Street."

The financial industry has grown from 3.5 percent of GDP to 8.3 percent in the last thirty years, a difference that amounts to $685 billion more in profits for Wall Street every year.

There was a great shift that occurred,” says senior fellow at Demos and contributor here at Policy Shop Wallace Turbeville, “where it all became transactional, meaning that the relationship exists with the client for the transaction itself. You may stand by your transaction, but it’s up to your customer to look out for it themselves."

Carl Levin’s interrogation of Lloyd Blankfein in front of the Permanent Subcommittee on Investigations three years ago, Turbeville says, is telling in how the industry has changed.

"Levin tried to engage him on the moral consequence of selling somebody a product that you’re betting against. And Mr. Blankfein couldn’t actually engage on the issue.

"He’s a trader. If you do a deal and you win, that’s your job,” Turbeville continues. “There is a morality to that: you stick by your deals."