The day is still young, but when it is over, the crisis that has plagued the market for months just might be over, at least for the near term. Default is off the table, but the issue of reducing the deficit and the debt is still a major concern. I say this under the assumption that both houses of Congress will vote in the affirmative for the now proposed legislation. If this happens, then the discussion seriously turns, correctly so, to U.S. fiscal issues, which the market will like and the U.S. needs.
Along this line, a reader responded to my column last week in which I suggested technology could provide a relatively painless way to raise revenue to reduce U.S. debt. I suggested that computer technology allows for moving fractional amounts of money from a wide base to a specific location. The example I referenced is a daily fractional banking transaction fee …
As to the minimal transaction fee solution, has it been brought to decision makers’ attention and if so and it’s painless and effective why is it not being implemented? Who would oppose it if it’s as good as you make it sound.
Actually, a proposal suggesting this idea came before Congress in late 2009. I am not sure of the details, but I know the house resolution proposed a 1% fee on banking transactions. So, yes, those in power are aware of the idea and it has been debated. Why that one proposal or any other proposal looking to raise revenue in this way is not in use is anyone’s guess. I, however, suspect the answer lies at the root of all spending and revenue raising issues – lobbying.
Government serves the needs of many who need help, and rightly so, but it is also a cash cow for many as well. Specifically, the tax code is a source of ready cash to the tune of tens of billions per year. Two of the largest lobbies in Washington D.C. represent the accounting and legal industries, both of which have a strong, vested interest in a complex tax structure. Imagine if a new revenue-raising program eliminated the need for our current tax code. How many accountants and lawyers would be out of business? We all know what these folks charge for their services, so imagine again how much money they can and would spend to protect their livelihoods.
Again, I am not recommending this, or any particular banking transaction fee. I don’t know the specifics of any one. What I am suggesting is that our representatives need to think along these lines as one source of revenue to pay for needed government. I am suggesting, and I implied this in the article, that the “old ways” no longer serve the needs of anyone, at least not well. I suggested computer technology offers a path to relatively painless revenue generation. This, of course, implies an overhaul of how government currently raises revenue. This is the rub.
In the abstract, everyone loves good ideas. Concretely, though, the ancient maxim referencing whose “ox is gored” is the basis upon which politicians decide which “good” ideas actually become law. I must say, ain’t that a shame?
Trade in the day – Invest in your life …
