Fox News ignored economists' support for Rep. Keith Ellison's (D-MN) financial transaction fee bill, called him "radical," and claimed he believes "citizens are indentured servants to the state."
On the August 6 edition of America Live, Gregg Jarrett hosted Fox News contributors Tony Sayegh and Sally Kohn to discuss a recent video of Ellison's appearance at a roundtable hosted by the Progressive Democrats of America. After playing a short clip of Ellison's remarks, Sayegh claimed Ellison's remarks represent "a radical view of progressives who believe that the American people are indentured servants to the state," adding that "literally he thinks we should be an ATM machine for government programs." Jarrett responded by claiming: "you get the clear sense that he thinks that your hard earned wages are literally government property and folks in Washington can reach into your pocket and grab more of it anytime they want":
But Jarrett and Sayegh misrepresented his remarks. Ellison was specifically discussing the Inclusive Prosperity Act, a bill that would impose a fee of a fraction of a percent on certain financial transactions, also known as a Robin Hood tax. As Kohn pointed out, the addition of small financial transaction fees on the billions of transactions that take place on Wall Street is not a radical or controversial idea. According to RobinHoodTax.org, a group that advocates for the tax, the fee would only affect Wall Street transactions and would have no impact on other Americans:
This small tax of less than ½ of 1% on Wall Street transactions can generate hundreds of billions of dollars each year in the US alone.
It won't affect ordinary Americans, their personal savings, or every day consumer activity, such as ATMs or debit cards. It's easy to enforce and tough to evade.
This is a tax on Wall Street, which created the greatest economic crisis in our nation, and globally, since the Great Depression. The same people who have returned to record profits and bonuses while ordinary Americans, the 99%, continue to pay the price of their crisis.
In a December 2009 open letter that was signed by over 200 economists, the Center for Economic and Policy Research pointed out that the tax would generate revenue "while having little impact on trades that have a positive impact":
The cost of trading financial assets has plummeted over the last three decades as a result of computerization. This has led to an enormous explosion in trading volume, with most trades having little economic or social value and redistributing disproportionate resources to the financial sector. A set of modest financial transactions taxes, which would just raise trading costs back to the level of two or three decades ago, would have very limited impact on trades that have real economic value.
Such taxes could both reduce the volume of speculation in financial markets and provide substantial revenue for either important public purposes and/or deficit reduction. Financial transactions taxes could be an important part of a reform package that seeks to remake the financial sector so that it better serves the larger economy.
Economist Paul Krugman explained in November 2011 that the small tax "could yield several hundred billion dollars in revenue over the next decade" without hurting the economy:
And then there's the idea of taxing financial transactions, which have exploded in recent decades. The economic value of all this trading is dubious at best. In fact, there's considerable evidence suggesting that too much trading is going on. Still, nobody is proposing a punitive tax. On the table, instead, are proposals like the one recently made by Senator Tom Harkin and Representative Peter DeFazio for a tiny fee on financial transactions.
And here's the thing: Because there are so many transactions, such a fee could yield several hundred billion dollars in revenue over the next decade. Again, this compares favorably with the savings from many of the harsh spending cuts being proposed in the name of fiscal responsibility.
But wouldn't such a tax hurt economic growth? As I said, the evidence suggests not -- if anything, it suggests that to the extent that taxing financial transactions reduces the volume of wheeling and dealing, that would be a good thing.
And it's instructive, too, to note that some economies already have financial transactions taxes -- and that among those who do are Hong Kong and Singapore. If some conservative starts claiming that such taxes are an unwarranted government intrusion, you might want to ask him why such taxes are imposed by the two countries that score highest on the Heritage Foundation's Index of Economic Freedom.