We really do have idiots for politicians

On the Tobin (of FTT) Tax:

MEPs were voting today on an own-initiative report by Greek Socialist Anni Podimata and backed by the Economic and Monetary Affairs Committee. It was approved by 529 to 127, with 18 abstentions. However, as it was not introduced by the European Commission, it is of no legislative consequence.

The bit that they are all missing (and this does include such foolish cheeleaders as Owen Tudor over at the TUC) is that it simply isn\’t the banks, or the bankers, who will end up coughing up the economic burden of such a tax.

It\’s everyone who interacts with the financial system. Everyone who transfers money for example, everyone who buys foreign currency: and everyone who buys something from someone who has transferred money or changed currencies. Everyone, that is, who buys from any supplier who is actually plugged into the financial system.

That is, any and everyone who purchases a product in the modern economy.

I can think of only two groups who would be unaffected. Those in an entirely local, cash based economy and those buying illegal drugs.

It does take some doing to impose a tax which hits everyone except tax dodgers and heroin dealers.

9 comments on “We really do have idiots for politicians

  1. “It does take some doing to impose a tax which hits everyone except tax dodgers and heroin dealers.”

    VAT?

    Although drug dealers are theoretically liable to income tax on their profits (has that ever been enforced?), I think there was a European Court decision that if a transaction is wholly illegal it isn’t subject to VAT.

  2. Since the consequence of a Tobin tax would be enormously to reduce the number of transactions undertaken and thereby substantially reduce tax revenues, it is difficult to see who will really pay it, except those who depend on the state.

  3. … as it was not introduced by the European Commission, it is of no legislative consequence.
    The (sort of) elected MEPs can’t legislate.
    The (definitely) unelected Commission can legislate.
    How did we ever agree to join?

  4. I saw a good justification for a Tobin Tax. A large amount of forex trading is done by banks whose activities are subsidised by their state guarantees. Therefore the amount of forex trading is above the optimum market-based level.

  5. A lot of wild assertions there, Matthew. Did you make that up, or did Dave Spart tell you it over a beer after a UKuncut demo?

  6. Kay Tie – is that really you? Not the sort of response you normally give – I was hoping to get some intelligent responses.

    It’s certainly not ‘wild’. And although there are lots of assertions I’m not entirely sure how you describe an argument without making them.

  7. I don’t know about in the EU, but in NZ a fair few people did pay tax on their criminal activities. The reason was that the tax department has a lot more powers than the police, so the IRD guys could go after them for unpaid tax, and then if the IRD took them to court and won (and to avoid paying tax you have to prove that you didn’t make the income), the police could use the evidence from the court case to then prosecute the criminal.
    But if the criminal paid all due taxes, then the IRD was strictly forbidden from sharing that information with the police. So the smarter, more organised and more risk-averse criminals did declare their illegal earnings. Which of course is not to say that every criminal always paid tax, or even that most did.

  8. It’s certainly not ‘wild’. And although there are lots of assertions I’m not entirely sure how you describe an argument without making them.

    Linking to some research or even go for the appeal to authority fallacy and link to someone who is an expert is a usual start.

    From what I can gather, and I’m not a regular reader of his blog, not even Ritchie makes that assertion.

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