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Political Report to the United Front Against Austerity: Page 6 of 9

The Signature Demand: The 1% Wall Street Sales Tax

Here in the United States, the signature demand of the United Front Against Austerity – the leading edge of our agitation – must be the 1% Wall Street Sales Tax, which grows organically out of every demand for the maintenance of public services and the social safety net, and out of every strike by public employees fighting for their own survival. The social safety net must be maintained and public employees must keep their jobs. When the reactionaries ask how this can be paid for, the answer is in every case the Wall Street sales tax.

The Wall Street sales tax has also been called the Tobin tax, the financial transfer tax, the securities transfer tax, or the Robin Hood tax. It should be called the Wall Street sales tax because this is the name that expresses most clearly what is being demanded. Quirky names like Robin Hood tax appear designed to fail.

The fiscal problems of the United States are largely due to the fact that Wall Street pays no taxes. Like the nobility in France before the French Revolution of 1789, the zombie bankers and hedge fund hyenas do not contribute to the public treasury. The total turnover in terms of buying and selling of securities, including stocks, bonds, and derivatives on US exchanges is surely in excess of five quadrillion dollars (5,000 trillion dollars). A 1% tax on this turnover, equally divided between the federal government and the states, largely solves the budget deficit at all levels of government. It also discourages the most dangerous forms of speculation, especially derivatives speculation, and helps to level the playing field between financial services – which are now in effect subsidized because they are not taxed – and the tangible, physical production of manufactured goods on which our economic survival depends.

A small federal tax on securities transfer was in effect until the Johnson administration. Here in New York State, a small transfer tax remains on the books, but the $20 to $30 billion yearly proceeds are being remitted to the zombie banks as a result of successful Wall Street extortion starting with Governor Hugh Carey. The Wall Street sales tax is very much in the mainstream. It has been nominally endorsed by the AFL-CIO, and has been vigorously supported by National Nurses United, one of the most militant and intelligent trade unions in the country. It is endorsed by the European Trade Union Confederation, the International Metal Workers Federation, and other leading institutions. The governments of Germany and France are in the process of instituting such a tax, although they also want to misdirect the proceeds. Opposition to this tax has been centered in Wall Street and the city of London.

The restoration of the Glass-Steagall Act is sometimes proposed as the leading edge of education in the current phase. The Glass-Steagall Act represents a necessary reform, but it is also a process reform inherently unsuited to be the centerpiece of mass action. Working families urgently need jobs, unemployment benefits, defense against foreclosures, student loan amnesty, access to Medicare, food stamps, and the like. The Wall Street sales tax is naturally paired with each of these demands as the means of paying for them. We should avoid Glass-Steagall fetishism, which presents the separation of commercial banking from investment banking and insurance as a kind of universal panacea.

The labor movement in Wisconsin, Ohio, Indiana, Michigan, and everywhere else needs the Wall Street sales tax as a principal weapon to put the pro-austerity union-busting forces on the defensive. When the average person realizes that, while individuals pay sales tax on necessities like clothing and often even food, while Wall Street pays nothing on flash trading and high frequency trading, the result is a powerful indignation which can be the key to the large-scale political transformation we need.

No Cuts

The most basic anti-austerity demand which must be advanced everywhere is that there must be no cuts in wages, benefits, social services, public services the social safety net, and related payments to working people. There must be no layoffs, no firings, no downsizing, no outsourcing, no off-shoring. There must be no tax increases or user fees for working people. This is the pledge which political candidates must sign, starting with Obama.

We propose a series of related anti-austerity demands for immediate educational use, each of which reflects the general principle of making Wall Street pay for the depression which the plutocrats have produced.

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