November 04, 2011
In case you were wondering how the Wall Street Journal managed to miss the $8 trillion housing bubble that sank the economy, we now know the answer, the WSJ apparently can’t find out even basic facts about the world. It doesn’t even know about the London Stock Exchange. It ran an editorial today railing against plans by the European Union to impose a financial transactions tax.
The editorial told readers that:
“The main reason the scheme hasn’t been enacted anywhere is that even a small tax on every financial transaction would drive business someplace else unless everyone was in it together. The Europeans, who have been toying with imposing a transaction tax of 0.1% on securities and 0.01% on derivatives, estimate that such a move could wipe out 90% of derivatives trading in Europe and cost the British economy and its Treasury tens of billions of pounds a year.”
If the WSJ had heard of the London Stock Exchange they would know that it has a 0.5 percent tax on stock trades. Contrary to the WSJ’s claim that even a small tax would wipe out the market, the London market remains one of the largest in the world. The UK raises between 0.2-0.3 percent of GDP in revenue each year, the equivalent of $30-$40 billion in the United States.
Of course the London exchange is not the only stock market that imposes a transactions tax, the Hong Kong market does as well, as do several markets in China and India. In fact, most stock markets around the world had transactions taxes until recently. Even the United States had a tax of 0.12 percent on new stock issues and 0.04 percent on trades of existing issues until 1964.
In spite of these taxes, countries have managed to maintain strong financial markets and healthy economic growth. Maybe the WSJ editorial writers will one day be able to escape its right-wing dungeon and get some facts about the world.
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