My response to his nonsense:
Great, so now we\’re getting our economics from actors are we?
I have been arguing for the last year that the banks, hedge funds and other titans of the City of London whose gambling got us into this trouble should pay to clean up the mess they caused.
Just for a moment, let\’s assume that we do want to do this. Great, so, will the Robin Hood Tax do this? Make the banksters pay?
No, it won\’t. There\’s this tricky little thing in economics called \”tax incidence\”. There\’s a difference between who hands over the cheque and who actually carries the economic burden of a tax. Your employer hands over the cheque for the income tax taken under PAYE but no one at all thinks that your employer is carrying that economic burden: you are. Same with NI.
The incidence of corporation tax is largely on the workers in the form of lower wages, some on the shareholders in lower returns. The company certainly never pays a penny of it.
And note that this isn\’t people \”trying\” to pass it on, it\’s just that the existence of a tax changes behaviour and thus the burden of it can be on a quite different set of people than those it\’s presumably aimed at.
The incidence, the economic burden, of the Robin Hood Tax will not be on the banks or the bankers. It will be upon all users of the financial system. Everyone with a bank account for example. Everyone who buys foreign currency to go on hols. Everyone who buys something from a company which has a bank account, makes money transfers, buys foreign currency to import something.
Yup, the tax will actually end up being paid by all of us, the poor bloody civilians.
It\’s true that it might shrink the banking industry as well, that it will entirely shut down the overnight interbank market (something we\’ve just spent hundreds of billions trying to keep open), that it will reduce the size of the foreign exchan industry, hey, it might even get some bankers fired.
But precisely because it will cause all of these things to happen that\’s why all of us out here, the generaly citizenry, are the peole who will end up paying the tax. Because each and every financial transaction will be charged the tax and we are each and every one of us consumers of thousands of financial transactions each and every day.
Think of a loaf of bread at the supermarket. Probably made from Canadian wheat (UK wheat is good for animal fodder, Canadian for bread and pasta, we send them animal fodder, we eat their wheat). So the Canadian farmer has sold his wheat as a future: no, this isn\’t speculation, this is hedging, a good thing. So there\’s a 0.05% tax there. Then, well let\’s ignore the speculators playing with futures who each get charged 0.05% on however many times they play with that wheat. Then there\’s the miller who has also bought a future: hedging again. 0.05% tax. He mills it, sells it to the baker. 0.05% tax. Baker sells it to the supermarket. 0.05% tax. You buy it on your debit card, 0.05% tax (yes, it applies to all irrevocable electronic transfers of money).
Doesn\’t look like all that much, does it, but some of the things we use ourselves can go through 20, 50 different processes and companies before they get to us. 0.05% tax every time, because the tax is on every money payment made through the banking system.
This tax will be on every single intermediary transaction in the entire supply chain. That\’s the whole point of it. And so guess what folks?
Who pays it? You and me, that\’s who.
And as for you Mr. Nighy, I\’ll make you a deal. I promise not to do Lear and you promise to read this little bit of economics.
And if you\’re prepared for some advanced study, read pages 144 to 187 here.
Where you will see that in the long run (which is the important part of course) the burden will fall upon workers and consumers. And, as our own home grown economics Nobel Laureate, Sir James Mirrlees, points out, even if you can tax intermediate transactions you really don\’t want to anyway.
Please, can we put this Robin Hood Tax idea to bed now? It\’s an absolutely horrible idea being promoted by those who have no idea whatsoever what they\’re talking about.
There are good ideas out there, like the banking insurance levy, which will both raise money and do some good. Try supporting them instead.