First published at:
By: Andrew Hanauer
If you are familiar with British actor Bill Nighy, it is most likely through his role in the popular film Love Actually, in which Nighy plays an aging rock star who grudgingly but shamelessly turns his hit song into a Christmas jingle. In a movie starring Liam Neeson, Colin Firth, Emma Thompson, Keira Knightly and Hugh Grant, Nighy stands out thanks to his quirky mannerisms and comedic timing.
This year, Nighy is using his talents for a less glamorous but far more meaningful role: that of “the Banker” in a YouTube video aimed at advocating for a Financial Transaction Tax (FTT). The FTT is also known as a Robin Hood tax because it would charge banks and other financial institutions a tiny tax for each financial transaction they make and use the money to fund initiatives aimed at helping the poor. In “the Banker,” Nighy plays a banker who is not entirely enthusiastic about this idea:
The Robin Hood tax scored a major victory in late January when eleven EU countries, including France and Germany, voted to approve an FTT for the Eurozone. Countries that are not participating in the FTT, most notably Great Britain, do not have to implement a Robin Hood tax, but transactions made on the London Stock Exchange by institutions based in those eleven countries will still be subjected to the FTT, thus further undermining the spurious claim that an FTT will simply drive financial institutions to move off-short or to non-participatory countries. The fact that Europe is moving ahead with the Robin Hood tax also undercuts that claim as it applies to American banks. If the UK passes an FTT, pressure will increase on Congress and the White House to do the same.
The FTT is a relatively simple concept. Every time a financial institution makes a transaction involving stocks, bonds, derivatives or foreign currency exchange, a tiny tax is attached to it, ranging from .5% of the transaction value all the way down to .005%. It does not apply to ordinary consumers (a person selling or buying a stock) and smaller investors can be exempted legislatively. Many of the transactions being taxed by an FTT are speculative in nature: investors buying and selling derivatives or bonds in seconds in the hopes of making quick money without producing anything of value for the economy as a whole.
But put aside that last critique of the global financial system and the FTT still makes sense. After all, such speculative investments are simply another form of product purchasing, the same way we go to the store and buy any number of things. The average consumer is asked to pay about $9 in sales taxes on $100 worth of goods; a Robin Hood tax would charge financial institutions somewhere between half of one cent and 50 cents on $100 worth of “goods.” Why is buying gas subject to taxation but buying bonds (and then reselling them thirty seconds later) a tax-free activity?
The main arguments against the tax are fairly easy to rebut intellectually, but more importantly they have been easily rebutted by extensive research, both on the economics of the tax and on its impact in countries where it has already been implemented. No, the tax will not simply cause banks to pass on the added costs to the rest of us. No, the tax will not encourage banks to move elsewhere. No, the tax will not cause havoc to global markets.
What the tax will do is free up billions of dollars to be spent on…well…where to begin? Avoid austerity? Fund education? Fund health care? Relieve foreign debt? Prevent children in developing countries from dying of preventable diseases? The fact that governments do not always spend money in such altruistic ways misses the point: it is our job to push for Robin Hood legislation that earmarks the funds raised for specific purposes. Congress, like any other political institution, will only pass legislation as good as the pressure mounted to support it.
Fans of Bill Nighy might know that he also starred in a little-known film called “The Girl in the Café,” in which he plays a British bureaucrat who takes a date to the G8 conference in Iceland only to watch in horror as she accosts powerful people with the imperative of devoting funds to combating poverty in the developing world. When those powerful people finally decide they’ve had enough and have their security team kindly escort her to the airport, Nighy follows her there and confronts her with the revelation that she has a criminal past.
Nighy demands to know what crime she committed.
“I hurt somebody who hurt a child,” she responds.
“Was it your child?” he asks.
“It was a child,” she responds. “Does it matter whose child?”
There needs to be the creation of a global system of finance that supports the well-being of children everywhere. A Financial Transaction Tax is another step in that direction. There is already legislation introduced in the House and Senate this year. It’s time for Congress to act.