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The Robin Hood Tax/Project watch

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    http://robinhoodtax.org.uk/

    To those who don't like clicking on links;
    (Original post by Robin Hood Tax)
    The Robin Hood Tax is a tiny tax on bankers that would raise billions to tackle poverty and climate change, at home and abroad.

    By taking an average of 0.05% from speculative banking transactions, hundreds of billions of pounds would be raised every year.

    That’s easily enough to stop cuts in crucial public services in the UK, and to help fight global poverty and climate change.
    Thoughts? I've yet to see a salient argument against it, apart from the predictable "against l1bertiEs l0lz" stuff. It also clearly isn't a disincentive for trade and won't cause people to move abroad, as paranoid right wing nutters tend to claim.
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    considering (IIRC) approx 10% of the UK's GDP comes from the banking sector, I think it would be unwise to decrease our competitive advantage.
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    0.05%? You think that would make a difference? On a £1 million transaction, that's a taxation of £50.
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    Do we have any information on what the average profit margin on speculative transactions are? I'd be willing to bet it's very small. It's impossible to know whether this is a good idea or not without knowing the profit margins, and how much this really costs as a proportion of financial income.
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    Trouble is, the vast majority of these transactions are done on a tiny %margin. Though it may relate to large figures, speculators have been shown to only be slightly better than flipping a coin
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    The 0.005% tax on currency transfers is pretty much unenforceable. You can do that kind of thing in any country in the world.
    The tax on stocks is the same as the UK's current stamp duty on share transfers. Its archaic - its unfair as it penalises short-term traders, easy to avoid on big transactions and encourages share transfers to go underground through the use of derivatives making the markets much harder to regulate.

    And, its doubtful whether it would raise any money. A lot of people predict that abolishing stamp duty on shares would pay for itself through increased takings on Capital Gains Tax.

    Spoiler:
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    "The Charles River findings suggested that the knock-on effects of stamp duty abolition would be that:

    Enhanced share values would provide an initial increase in Capital Gains Tax revenues of approximately £6 billion;
    The volume of UK companies' shares traded on the London Stock Exchange would increase by around 40%;
    Income and Corporation tax revenues would increase significantly;
    The FTSE All-share index would increase by up to 5%;
    There would be overall net efficiency gains to the economy of around £3 billion."
    Source: http://www.lowtax.net/lowtax/html/of...k_gotaway.html
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    (Original post by smalltownboy)
    http://robinhoodtax.org.uk/

    To those who don't like clicking on links;


    Thoughts? I've yet to see a salient argument against it, apart from the predictable "against l1bertiEs l0lz" stuff. It also clearly isn't a disincentive for trade and won't cause people to move abroad, as paranoid right wing nutters tend to claim.
    (Original post by smalltownboy)
    0.05%? You think that would make a difference? On a £1 million transaction, that's a taxation of £50.
    Worldwide, it's a great idea; on a UK-only scale, it's economic suicide. As an aside, it's also not a Robin Hood Tax - not least because it doesn't tax the rich, but mainly because it already has a technical name: a Tobin Tax.

    Why is it a great idea? Generally tax is a good idea if it makes it more expensive to do something that it's bad for society to do. A Tobin Tax adds to the cost of financial transactions. Now, while slick financial transactions are great and efficient, there were clearly a lot of speculative transactions during booms that made the booms and busts more pronounced. Taxing transactions can reduce this huge mass of unnecessary transactions. There's a flip side, which is that it makes useful financial transactions more expensive too, though I'd think of this as a lesser problem at 0.05% levels. Still a salient argument against, but a minor one, IMHO.

    Why is it suicide for the UK to do this alone? Because our banking sector relies on being more efficient and having lower transaction costs than elsewhere. You say 0.05% can't make much of a difference, but most of the bankign wealth generated comes from taking very small slices off very large sums of money. Trillions upon trillions flows through London, and taking fractions of a percent of it generated a lot of economic growth and tax revenue. You make it a bit more expensive to do business in London than elsewhere, business moves. Finance is global and moving isn't that difficult, so this is a solution that needs to be global.
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    Apart from the extremely valid arguments you dismiss offhand about a violation of liberty, this would be a bad idea as, given the small margins of profit on a lot of these transactions, this will really hurt the banking sector which contributes massively to the nation's wealth and tax already. It also hurts short term investors, as they have to pay tax when they move their money from one investment to another.
    How can it be a good idea to take money away from people who are good with money (successful investors) and give it to people who clearly are not (the government)?
    If you want to take from the rich and give to the poor, then tax the rich and give money to the poor in the form of social benefit. Don't tax financial transactions themselves - they help generate the wealth in the first place.
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    OP do you know anything at all about banking?
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    I'm going to throw in my two cents, but, I'm no economics student or mathematician (as will be evident in what I say):

    Surely a tax of "up to 0.05%" resulting in $400billion worldwide is a bit of a pithy idea if $3000billion (or $3trillion) is flowing through banks daily, giving a yearly average of 1.095quadrillion (1.095x10^15). Ignoring ideas of inflation and such for just a moment, if the tax were to be raised worldwide to 5% on everything, there'd be a yearly yield of $40trillion. That's $4quadrillion a century - 4 years of worldwide banking profits, over the course of 100.

    Surely pushing for that (again, ignoring any arguments of inflation etc) would give a better worldwide outcome. Countries would be able to get an equal 'share' of $200billion per year, 10% of the American deficit. It's obviously a very 'Commie Red' idea to think that all this money could be raised and shared out equally, but, the benefits that could potentially arise should push for people to agree.

    Then there's the idea of inflation, which on the one hand is a possibility, but, on the other hand if the banks are already making $1.095quadrillion a year and we're taxing them $40trillion a year, then we're just taking some manure from the stockpile and spreading it over the field, rather than going out to buy more manure when we already have a pile of it anyway.


    Heck, at the rate of $400billion worldwide, we're looking at $40trillion in a century, with an 'equal share' ideal of $2billion a year to each country. Sure, it's good, but, when the West has huge deficits, and the 'third world' is the 'economic underclass', surely it's better to push for more than to play it safe and be happy with a few more pennies...?


    [Feel free to correct my math or tell me I'm talking out of my rear...as I most probably am wrong somewhere].
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    Wasn't robin hood opposed to taxation? So much that he robbed from the thieving *******s who taxed the people?

    With that aside, the robin hood tax doesn't look to be quite as bad as many other forms of tax. I'm still waiting to hear some decent opposition to it, as since I'm not much of economist myself, I'm reliant on the views of others. I sincerely believe that since all that's been said about the Robin Hood Tax has been that it'd be awesome is a little disturbing, so I can't support it yet. I'd have to read the opposing arguments first. And then disagree with the vast majority of them.
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    Why does this Robin Tax idea apply only to banks? Surely the whole purpose of taxation is to redistribute resources and wealth downwards?

    You take more from the rich and give to the disadvantaged?

    No, wait, we have had a government who has gone out of its way to increase the privileges for the very wealthy (look at London over the last 10 or so years) and doubly so to restrict the chances of working-class people (think 10p tax).

    I don't see how this Robin Hood tax has any chance of helping anyone if the result of it is the decline of the banking industry.
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    @CatatonicStupor Don't you think that if a tax of 5% were raised on all transactions, many of those transactions (let's say those with a 3% return, for example) might not take place. This would lead to revenues nowhere near those you predict by multiplying the Robin Hood figures by 100.

    If those transactions don't take place, banks don't make any profits, if banks don't make profits, they either go out of business and leave us with no banking sector (or a monopoly on banking, leading to higher charges for consumers) or a banking system that is propped up, by the taxpayer. No banking sector means no credit to businesses who need it to invest and grow, no bank accounts for ordinary people and general economic collapse.

    The argument runs the same for a tax of 0.05% on transactions. Many of the transactions have a margin much smaller than this, and so won't take place. Essentially, if it's going to raise £200bn/year, that's £200bn/yr out of the banking sector into the public purse. Essentially, it comes down to whether you believe that the governments will spend the money any better than it filtering through the economy. Bankers (and the rich in society) buy things, and keep many more people in work than you might imagine. If there's no-one to buy products, companies won't produce it and those people who work producing things get stung.
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    (Original post by simontinsley)
    @CatatonicStupor Don't you think that if a tax of 5% were raised on all transactions, many of those transactions (let's say those with a 3% return, for example) might not take place. This would lead to revenues nowhere near those you predict by multiplying the Robin Hood figures by 100.

    If those transactions don't take place, banks don't make any profits, if banks don't make profits, they either go out of business and leave us with no banking sector (or a monopoly on banking, leading to higher charges for consumers) or a banking system that is propped up, by the taxpayer. No banking sector means no credit to businesses who need it to invest and grow, no bank accounts for ordinary people and general economic collapse.

    The argument runs the same for a tax of 0.05% on transactions. Many of the transactions have a margin much smaller than this, and so won't take place. Essentially, if it's going to raise £200bn/year, that's £200bn/yr out of the banking sector into the public purse. Essentially, it comes down to whether you believe that the governments will spend the money any better than it filtering through the economy. Bankers (and the rich in society) buy things, and keep many more people in work than you might imagine. If there's no-one to buy products, companies won't produce it and those people who work producing things get stung.
    This will hardly mean there's no-one to buy products. Yes, it will reduce the profit of banks and thus the incomes of the very wealthy, to a small extent. However the rich save a disproportionate amount of their income, so taking from the rich to give to the poor tends to boost demand. Moreover, the main economic rationale behind this is to reduce socially useless banking activities - speculation is usually good, because it makes prices more accurate, but the rampant speculation on the scale as happening during the last few years is not, because it results in volatile markets and systemic weaknesses.
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    (Original post by Drogue)
    This will hardly mean there's no-one to buy products.
    Ok, so I'm exaggerating on the scale, but the same applies. It's not that there's no-one to buy things, just less things are being bought. The reverse multiplier effect still occurs, just not to the point that the whole country shuts down.

    (Original post by Drogue)
    Yes, it will reduce the profit of banks and thus the incomes of the very wealthy, to a small extent.
    To a small extent? The 1,000 largest banks made total profits of ~$800billion in 07/08 and similar in 06/07, before the onset of the crisis. The Robin Hood tax estimates taking ~£200billion (~$300billion) per annum. That's 30% (I'm allowing for profits of other smaller banking institutions, not just terrible maths) of banking profits, a huge hit.

    (Original post by Drogue)
    However the rich save a disproportionate amount of their income, so taking from the rich to give to the poor tends to boost demand.
    It is no coincidence that those countries with the highest savings rates have the highest rates of GDP. Higher levels of savings correlate with higher levels of investment (due to a great supply of loanable funds and therefore lower interest rates). What you lose in consumer spending you gain in business investment and investment tends to lead to further growth in the future. This is one of the major problems in LDCs whereby businesses cannot get any form of credit to either start-up or invest.

    I appreciate that this seems to contradict what I said above with not spending leading to job losses. However, in this case it is that businesses are spending, as a result of lower interest rates, in the other case, it is that less wealth is being created.

    (Original post by Drogue)
    Moreover, the main economic rationale behind this is to reduce socially useless banking activities - speculation is usually good, because it makes prices more accurate, but the rampant speculation on the scale as happening during the last few years is not, because it results in volatile markets and systemic weaknesses.
    It's been stated on the Robin Hood website that this is different from a Tobin Tax purely because that isn't the rationale. The rationale is revenue generation. While I can appreciate this is one possible positive effect, although I'd need to see evidence that the market are too volatile, and that this tax would significantly reduce that volatility. Even with this as a possible benefit, I still don't think that it outweighs the costs associated.
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    350 Economists think it's a good idea...
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    364 Economists thought Geoffrey Howe's 1981 budget was a bad idea.

    Just because large numbers of economists support/oppose something doesn't mean they're right...
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    (Original post by simontinsley)
    364 Economists thought Geoffrey Howe's 1981 budget was a bad idea.

    Just because large numbers of economists support/oppose something doesn't mean they're right...
    The difference is that in that situation, most of the the 364 economists had different ideas as to what the solution was, united only in their opposition of the 1981 budget. (It's worth noting that whilst the budget worked for controlling inflation, it caused unemployment to soar. So maybe the economists had a point...)

    In comparison, the 300+ economists are in agreement that this is a good idea. It's an important difference.

    I do see your point about the fallacy of appeal to authority, but I don't think any of the points posted here would have escaped the economists who are supporting the tax.
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    It's a crap idea. It just beggars belief that people can be this stupid:

    - It will cost an eye-watering amount to implement.

    - Not every country will implement it.

    - Therefore the countries that do will be left at a disadvantage.

    - If we implement it, then the $1.5 trillion of forex that's traded each day in London will be decimated. People will just go NDF, trade forex swaps or trade in countries without the tax to avoid it. Most banks could move their fx transactions elsewhere in a number or days, if not hours.

    - You really think the banks will take the profit hit? Course not, it'll get passed on to the consumer.

    - Have we learnt nothing from history? Tax the markets and they move. Kennedy taxed the US bond market in the '60s, so all non-domestic dollar bond issuance moved to London.

    - It's blatant political points scoring of the very worst kind. Put the words "tax" and "bankers" in the same sentence and the idiot electorate eat it up, whatever the economic consequences. Still, it's an easy way to ensure the government doesn't have to face its economic ****-ups and to help them cling onto power.

    Jesus Christ I despair for the future of this country...
 
 
 
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