Support creation of national speculation reduction tax for U.S. financial markets
March 24, 2019

Post

Whereas, the stock markets do not accurately reflect the underlying health of the U.S. economy, but rather are primarily driven by the speculative bets made by ultrawealthy speculators; and

Whereas, the daily shifts in the values of corporate stocks have almost no impact on the lives of most Americans; and

Whereas, less than half of all Americans directly own shares of corporate stock, and less than a third own more than $5,000 worth of stock; and

Whereas, those who do own stock trade their shares very rarely; and

Whereas, the only situation in which purchasing a share of stock puts new money into the real, productive economy is during an initial public offering (IPO); and

Whereas, IPOs represent less than 0.15 percent of all stock traded annually; and

Whereas, the prices of stock primarily reflects the sentiments of speculators betting on the profitability of firms; and

Whereas, the richest 10 percent of the population own 91 percent of all stock and 94 percent of all other financial assets; and

Whereas, the gambling by these speculators in the financial markets was one of the primary causes of the 2007-08 financial collapse; and

Whereas, gambling in Atlantic City is taxed at 8 percent and gambling in Las Vegas is taxed at 6.25 percent; and

Whereas, a progressive speculation reduction tax would reduce the volatility of financial markets; and

Whereas, a progressive tax could tax trades held for less than a week at 5 percent, trades held less than a month at 2 percent and trades held for more than a year at 0 percent; and

Whereas, as progressive tax would have almost no impact on the assets or returns of the CalSTRS or CalPERS retirement funds; and

Whereas, several European countries have successfully introduced these types of financial transactions taxes; and

Whereas, multiple bills have been introduced in the U.S. Congress to create a financial transaction tax,

Therefore, be it resolved, that the California Federation of Teachers call on our elected officials to propose legislation to create a speculation reduction tax, or what is often called a financial transactions tax at the federal level.

  • Passed as Resolution 17 by CFT Convention on March 24, 2019
  • Submitted by the Executive Council