Proposed Robin Hood Tax rate is very low but would raise between $10 and $12 billion per year for Illinois.
Chicago, USA (03 Mar. 2014) - Activists in Chicago, Illinois are suggesting some progressive tax measures in a hope to deal with a growing pension crisis in the state. Among the proposals is a Financial Transactions Tax (FTT), commonly referred to as the Robin Hood Tax (RHT), as a way to raise needed revenue.
Championing alternative revenue raising measures in Illinois is the Chicago Political Economy Group (CPEG). Dr. Bill Barclay, who worked for 22 years in financial services and a former Chicago Stock Exchange official, has been involved with developing legislation, HB 5929, for a FTT in Illinois.
State has "Revenue problem not a pension problem"
State legislators have boxed themselves into a political dead-end by adopting the austerity agenda of the business community. In December 2013 a state Pension cutting bill was pushed through but many analysts feel that the financial arguments are shaky and the legislation may violate the state's constitution.
CPEG and others argue that Illinois has a revenue, not a pension problem. Activists condemn State Speaker Madigan, an extremely wealthy individual, who condemns Illinois pension system being "too rich".
Robin Hood Tax in Illinois
Illinois has two of the largest financial markets in the world, the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE). Each year the value of products traded on these two exchanges totals well over $500 trillion.
HB 5929, submitted by Rep. Mary Flowers, proposes a $1/contract fee on all agricultural futures and options traded on these two exchanges and a $2/contract fee on all other futures and options traded on these two exchanges. Average contract size at these exchanges is more than $225,000. So this tax amounts to less than 2/1000s of per cent of contract value.
While the proposed RHT rate is very low it would raise between $10 and $12 billion per year for Illinois.
Supporters point out that the vast majority of trading is done by large banks, hedge funds -- financial institutions in general -- other large businesses, and wealthy individuals. None of these would be hurt significantly by the proposed RHT.
There might be some reduction in what is called "high frequency trading," where traders buy and sell the same contract within seconds but reducing such trading will not harm the economy. In fact, these high frequency trades are considered destabilizing gambling, so it would amount to a 'sin tax.'
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