Up to now, my primary issue with Bernie Sanders was gun control. Unlike most progressives, he does not seem to believe that guns kill people, black people disproportionately, and that states with strict gun laws have few gun related homicides. To me this is like someone saying that climate change does not have significant anthropomorphic causes. It simply does not fit the data, and such denialism is simply kowtowing to corporate interests.
However now I read that he wants to tax financial transactions. The justification for this is to prevent high speed trading, which is obviously a drag on the market, so there is some validity to this. There will also be a tax credit for lower income people, so probably not the middle class. The article also mentions a fantasy that brokerage firms will not necessarily pass the cost to customers. What is not mentioned is why, given that the industry has invested billions of dollars in high speed trading over the past several years, they are just going to shut down. The tax will mean they have to wait for stocks to rise from $1 to $1.006 instead of $1.001, but that won't effect the mechanics that cause the stock market to crash. One reason for a stock markets crash is that the prices are falling and the day traders want to minimize loss. The tax won't cause traders to wait longer to sell.
So why do I think this tax is directed towards the middle class? First, there does not seem to be a threshold. A minimum yearly sale of of $100,000 would protect the middle class from taxes on ordinary or recreational sales, and would not significantly reduce the tax on day traders who would have to sell that much on a regular basis to pay fees and generate a little profit. One hobby of my mother was playing with some of her retirement on the stock market.
Second, stocks are taxed at a rate that is 100 times that of derivatives. I understand that derivatives are used to manage the risk of stocks, so low taxes can mean sophisticated investors will be more comfortable keeping a losing stock. On the other hand, sophisticated investors, if we believe the hype, know that keeping a stock long term is the best strategy to investing, unless it really isn't.
We also know that derivatives are one of the main causes of the housing crash and the recession in that they are used to hide risk from even sophisticated investors. It seems to me, then, that the difference in taxes is like the historical difference in drug laws. Use crack, a drug that is not used by wall street, and get a heavy sentence. Use cocaine, a favorite drug on wall street, get a much lighter sentence.
I am not against a financial transaction tax, as long as it does not effect the retirement of the middle class. I can imagine a person on a fixed income selling stocks every month and all of the sudden have it decreased by $20, which of course is nothing, but why would we want to do that when we could raise the capital gains tax? I am not even sure how this is consistent with an agenda to reign in wall street, again the capital gains tax.
Furthermore is Sanders is going to promote this as a sin tax. While I know sin taxes are all the rage among radical religious figures, I think it is dangerous for progressives. If we are to support it, we should at least ask for a pound of flesh in return. We should ask for a 10% federal sin tax on bullets.