Bernie Sanders wants to fund his free college plan with a financial transaction tax on Wall Street, and he’s still pushing that the proposal is feasible.
He’s found a few economists to explain the “Wall Street speculation” tax, according to Marketplace.
Taxes lower the amount of something; if politicians want fewer cars on the road, they impose a tax on gas or new cars. The goal of the tax for Sanders, aside from raising revenue to fund his college plan, is to restrain high-frequency trading.
Sanders doesn’t want a bare revenue tax, though. He wants to change how Wall Street works, as he’s made clear.
“We’ll no longer tolerate an economy and a political system that’s been rigged by Wall Street to benefit the wealthiest Americans,” he tweeted.
To that end, he’s copied some Europeans. A financial transaction tax exists in a few countries such as the United Kingdom and Sweden. It hasn’t led to the disintegration of the stock markets there, though opponents of a tax on Wall Street speculation don’t make the claim.
The level of a tax can have strong effects, however. Too high, and companies leave one stock exchange for another. Too low, and Sanders won’t collect the revenue he needs to fund free college. He’ll need it, too; his campaign expects an annual cost of $75 billion, and it could be higher, given that campaigns tend to make optimistic estimates.
Any tax will hit investors, eventually. A financial transaction tax isn’t likely to rip asunder Wall Street as it stands, but it’d limit what investors otherwise do. It’s not a complex tax, either. The battle would be political. It’s highly unlikely that a President Sanders’s college plan and speculation tax would make it through a Republican-controlled Congress.
That has American business not as worried about the Sanders campaign as might be expected.
“For those New Yorkers out there connected to the financial sector—and worried about what a President Bernie Sanders may do to them—my advice is to relax. Barring a cataclysmic event that reshapes the entire political landscape between now and November, you can take Wall Street reform off of your list of things to worry about,” Gary Meltz wrote for Crain’s New York Business.
If that’s comforting for Wall Street, though, that leaves it unclear as to whether it endangers Sanders’s entire plan for higher education.