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Congressman Proposes Wall Street Sales Tax

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Congressman Rush Holt, one of many candidates vying for the New Jersey Democratic Party’s nomination for U.S. Senate, has put out a campaign ad endorsing the financial speculation tax.

“These days, most stock trades aren’t made by human beings,” Holt says. “They’re made by supercomputers that flip stocks at a fraction of a second, helping bankers get rich quick.”

Long-term investors, Holt says, will not feel any effect from the tax, but speculators using supercomputers to analyze stocks and trade at lightning speed will generate millions that could be used for other purposes.

Holt is referring to the recent and sizable expansion of High Frequency Trading or flash trading. HFT is done by high-end computers that trade financial securities in fractions of a second to gain advantage. The value created for the owners of the machines is considerable, the value created for society is non-existent.

Holt, standing in front of a white board in a laboratory classroom-like set, says most Democrats don’t have the nerve to support such a move. But he does.

“The computers on Wall Street are beating the rest of us up,” Holt says. “So I say, let’s fight back.”

There has been a detailed proposal on a Wall Street Sales Tax for some time. When studied, there were not only no downsides for the public, but also possible upsides beyond revenue collection as the tax could cool markets by disincentivizing hyper-speculating activities like HFT – the prime suspect in the so-called 2010 Flash Crash.

One of Holt’s opponents in the race is longtime Wall Street beneficiary Cory Booker. Holt may know he has no hope of out-fundraising Booker with the speculators on Wall Street and decided to make a populist appeal for regulations that would not only bring in needed revenue, but also help stabilize financial markets and prevent the need for future bank bailouts.

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Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.