That is why my suggestion of replacing effectively all current taxes with a single 1% Financial Transaction Tax is so neat. Even the financial sector would salivate at the idea of having no taxes on profits. They wouldn't need to send all their profits out to holdings in Bermuda and other tax havens. And of course, we would have a system that was simple to implement and above all FAIR. No-one can reasonably defend a system in which it costs the man in the street anything between 2 and 10% to make a financial transaction, plus up to 20% of VAT on most things they buy, while the financial section pay nothing to exchange trillions of dollars everyday.
There's another influential paper calling for an FTT written by Dean Baker that was published in December 2008. It takes the following breakdown of transaction taxes originally proposed in 2002 by Pollin, Baker and Schaberg.
- Bonds: 0.01 percent for each year remaining until maturity
- Futures: 0.02 percent of the notional value of the underlying asset
- Options: 0.5 percent of the premium paid for the option
- Interest Rate Swaps:0.02 percent of asset value for each year until the expiration of the agreement
We just need some political parties to include the idea in their manifestoes so that we can vote for them.