Letter to the Editor
Global tax not the answer
In response to Rosaleen O’Sullivan’s Sept. 21 article, “US would benefit from supporting global tax”: It’s unfortunate that some policymakers and citizens believe that creating a global tax on financial transactions will help the world economy recover or prevent future financial crisis.
Simply reallocating money from financial sector transactions into a financial sector bailout or worldwide stimulus fund does not create new economic output.
Remember, Tobin tax revenues come from profits that would either be reinvested or used for consumption anyway. The tax effectively takes efficient capital, squanders some of it with its bureaucracy and then inefficiently reallocates the capital. It also discourages credit transactions, a crucial tool for economy recovery.
Additionally, creating a bailout fund from a Tobin tax would only accelerate speculative behavior; bankers will be more willing to take risk because they know that if they fail, there is a bailout fund waiting for them. Policymakers should take more care to analyze the effects of their policies.
Sometimes government intervention isn’t always the answer.
Richard Graham
Sophomore, business administration
Despite being interesting and informative, I feel like this response might paint an unfair picture on the original premise of the Tobin tax, which was to lower short-term speculation and decrease foreign investment to reduce inflation.
While I’m not sure using this global reserve to fund bail-outs is a wise idea, the possibility of excess funds that could be to support sustainability in struggling 3rd world / developing countries is a prospect that is certainly tantalizing. Or maybe the revenue could go to developing fair universal labor laws, disease. The point is there are worthy causes out there which could create global benefits.
Granted its a waste of time to really discuss since its not a realistic option. Establishing universal support would take a political campaign greater than Obama’s and a media push for an issue that not even Fox News could fabricate.
peace
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