Geithner the Wall St. flunky does his masters' bidding, nixes a transaction tax

[brentspeak]

His message, endorsed by Obama: No, We Can't. (but we can give trillions to banks, however...)

http://www.bloomberg.com/apps/news?pid=20601087&sid=a45uxLtxi3N8&pos=3

Geithner Dismisses Tax on Financial Transactions as Unworkable

By Robert Schmidt

Dec. 5 (Bloomberg) -- Treasury Secretary Timothy Geithner, throwing cold water on a plan by congressional Democrats to tax financial transactions, said banks and other market participants would find ways to circumvent the expense.

“I have not seen the version of that that I think works,” Geithner said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” that airs throughout the weekend. Firms are “going to move in a heartbeat to get around any tax like that.”

snip

The prospect of a so-called Tobin tax, floated last month by U.K. Prime Minister Gordon Brown, is already provoking nervous U.S. financial companies to lobby for its defeat. Democrats, including Oregon Representative Pete DeFazio and Iowa Senator Tom Harkin, this week proposed taxing large transactions in stocks and derivatives. House Speaker Nancy Pelosi said the idea has a “great deal of merit.”

Tobin Tax

In yesterday’s interview, Geithner, echoing some of the banking industry’s reasons for opposing a Tobin tax, said he was concerned it wouldn’t be able to be adopted globally, making it harder to impose. He also noted that the tax may hit less sophisticated investors, instead of the big firms.

[andym]

1. Hopefully congress passes these taxes.

If he's wrong, then there may be some useful regulation placed on financial speculation.
If he's right, then basically the laws would be ineffective. However, they would do no direct harm.

So using his own logic, there is no reason not to pass these taxes.

[Zynx]

2. I will ignore your polemic to address the substance here.

I disagree with Geithner on this one. I would actually be in favor of a transactions tax as an alternative to other forms of investment taxation. A transactions tax could be automated through the various information systems that are available at the financial institutions and made at a low rate that would not discourage investment, but would murder speculators. There is, quite possibly, too much liquidity in the markets right now. We are well beyond what is needed for price discovery.

The concerns about financial activity shifting overseas are ill-founded. Investors use well-established markets like New York and London because they are safe and secure, relatively speaking. If alternative markets arose in third world countries, investors would shun them because they are less confident in the safety and security of those markets. Transparency and legal recourses are not as strong for investors there. As such, they would remain here by and large and pay the tax. If anything, with modern technology, such a tax has become easier to administer. It would have been very difficult indeed back in the day, but now it should be quite doable.