Doomed to Repeat History: Nicolas Cage Movies and Financial Transaction Taxes
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In The Life of Reason, George Santayana wrote, “Those who cannot remember the past are condemned to repeat it.”
But despite best intentions, the same mistakes are made over and over again. Politicians keep believing they won’t get caught. The Jets keep starting Mark Sanchez. Studios keep making Nicolas Cage movies. And the financial transaction tax keeps surfacing as an idea for alleviating fiscal woes.
Often referred to as the “Tobin Tax” after economist James Tobin, the financial transaction tax is in the news yet again. Across the pond, Europe seems intent to move forward with a tax on trading to generate revenue, a move that would affect any American company doing business in the E.U. Stateside, Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) plan to reintroduce a bill calling for a Tobin Tax.
Perhaps these policymakers are blinded by the dollar signs dancing in front of their eyes, but history has proven that these financial transaction taxes don’t generate near the revenue their proponents anticipate, and tend to hurt Main Street more than Wall Street. In response to ProPublica’s Jesse Eisinger’s New York Times piece, Tom Quaadman from the Chamber’s Center for Capital Markets Competitiveness sent a letter to the editor with a gentle reminder that this lesson has been learned before:
The United States, Sweden and Japan have had similar fees in the past and repealed them because the tax hurt average investors, reduced savings and made it harder for America’s job creators to grow …. The wisdom of Presidents John F. Kennedy and Lyndon B. Johnson in repealing this job-killing tax still holds true today.
The temptation of instituting this historically troubled tax should also be balanced with the economic conditions. In a letter to European tax commissioner Algirdas Semeta, a coalition including the Chamber, Financial Services Roundtable, and Financial Services Forum, wrote:
Global markets remain fragile, with many economies experiencing historic levels of unemployment and unusually slow recoveries. Now is not the time to experiment with policies that experience tells us will impede growth, fragment markets, increase market volatility, harm savings, and encourage uneconomic tax-motivated decision making.
One only needs to look at Nicolas Cage’s IMDb page to realize that repeating some mistakes is inevitable (National Treasure 3, really?). But instituting financial transaction taxes doesn’t need to be one of those mistakes.