The evaporation of trillions in financial wealth in mere days is obviously a tremendous waste –and in a world of obscene poverty– morally indefensible. Senator Bernie Sanders has proposed a solution: tax Wall Street to pay for tuition-free enrollment at every public university in the nation.
As the diagram below demonstrates, Senator Sanders’ Wall Street sales tax (also known as a Robin Hood tax) is remarkably simple. You and I pay sales tax on almost everything we buy, from clothing to cars, food and drinks, cable and phone bills, health insurance, and well, you get the picture. Even groceries are subjected to sales tax in 10 states. Yet Wall Street hedge funds and banks don’t pay sales tax on their financial transactions which amount to trillions every day.
If you think of Wall Street as the world’s biggest casino, the Wall Street sales tax is equivalent with “taking money off the table.” Regardless if markets soar or crash, funds from the sales tax are automatically saved and removed from the instability of financial markets. As economist Dean Baker writes, this could provide a substantial infusion of new tax revenue.
“[A Wall Street sales tax] would raise more than $130 billion a year or more than $1.5 trillion over the next decade. This is real money; it dwarfs the sums that have dominated most budget debates in recent years. For example, the Republicans had been trying to push through cuts to the food stamp program of $40 billion over the course of a decade. The sum that can be raised by this FTT proposal is more than thirty times as large. The revenue from a FTT could go far toward rebuilding the infrastructure, improving the health care system, or paying for college tuition, as suggested by Senator Sanders.”
Crippling student debt and volatile financial markets are two of the biggest problems facing our economy today. A Wall Street sales tax is the proverbial stone that kills both birds.