Bernie Sanders, the Senator from Vermont seeking the Democratic presidential nomination, has proposed a financial transactions tax (FTT), a Wall Street Sales tax. The revenue obtained will be used to make public colleges tuition-free.
The proposal for a FTT can be a real game-changer in reforming the financial sector. No other policy will impact the financial sector as much as an FTT will. It would impose a sales tax on the stocks and financial assets. Thereby, speculators will have to pay a tax on their trades.
An FTT, which could be proposed at different rates, can raise large sums of money. The following rate structure has been proposed by Sanders in a bill by Minneapolis Congressman Keith Ellison. In the European Union, eleven countries are working for the implementation of a set of FTTs that would tax the stock trades at a rate of around 0.1 percent.
According to a recent analysis of the European proposal, more than $130 billion a year or more than $1.5 trillion over the next decade can be raised by a comparable tax in the United States.
Sanders suggested that the revenue that will be obtained from an FTT can be used in rebuilding infrastructure, paying college tuition or improving the healthcare system.