He’s back in The Guardian. My comment on his piece:
“It would be passed on to ordinary people? According to the IMF it would be paid predominantly by the richest.”
That’s not actually what the IMF says, not completely and totally.
The IMF report is here:
In the short term the tax will lower the price of all securities which are subject to the tax. Many of these are held by rich people so yes, the rich will carry the burden. But do note that your pension plan also holds the same assets and your pension plan will fall by the same amount as those shares and bonds of the rich.
So, this is, in part, a tax upon your pension. However, the IMF goes on to point out that that is only the short term effect. The long term is something different:
How much overall investment would fall as a result of the STT would depend on the relative
elasticities of capital supply and demand. In a small, open economy, the after-tax return on
capital is determined on the world market. In response to imposition of the STT, capital
would flow out until its after-tax return was restored to the world market level. In the long
run, capital owners would therefore not bear the burden of the STT; it would fall on workers, who as a result of the smaller capital stock would be less productive and receive lower
wages. If, however, the capital supply is less than perfectly elastic, the STT will lower the
return on capital, and capital owners will share the burden of the tax with workers.
So the tax will lead to lower wages for everyone. Isn’t that just lovely?
Nicolas Sarkozy’s insistence that revenue should be used to help the poorest, the hungry and those hit by floods and other extreme weather episodes linked to climate change has been particularly important.
Well, yes, but we’ve another problem here. What revenue? What extra revenue is that?
As the EU’s own report points out there will be some income from this tax, yes. But the tax will also cause the economy to contract. Meaning that we get less revenue from all of the other taxes. And as the EU’s own report goes on to say, the net effect on revenue will be negative. The FTT will actually *reduce* the amount of tax collected.
So, to recap: the Robin Hood Tax will reduce pensions, reduce wages and won’t in fact raise any money. Could someone remind me why anyone wants to do this again?