Commentaries

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“Tobin tax” gaining ground in Europe

No longer just a hopeless cause for anti-capitalist activists, the idea of a global tax on financial transactions is gaining ground in Europe.

European Union leaders could not agree to put it on the agenda of this week’s G20 summit on reforming the financial system in Pittsburgh, but the leaders of France, Germany and the European Commission endorsed the concept.
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A dark hour for CMBS

The last week has been a bit of a shocker for Europe’s already crumbling commercial mortgage-backed securities market (CMBS).
Investors have had to cope with steep declines in the value of their bonds and a wave of downgrades by rating agencies.

Now, to add insult to injury, there has been a jump in legal and structural issues. Bondholders are having their rights diluted over or taking on fresh liabilities they didn’t even realise they had.

Why the U.S. needs a Value Added Tax

Swelling deficits and an aging population leave few palatable options when it comes to taxes.

The best choice by far would be the creation of a new value added tax — a “money machine” that can bring in huge sums with relatively little effort. America is alone among rich nations in not charging a VAT, and its continued unwillingness to do so will make it harder to cope with the fiscal challenges ahead.

The rich are not easy quarry

Cash-strapped politicians are more willing to play Robin Hood than at any time in a generation. Tax rates on the rich may soon hit levels not seen since the 1980s.

The wealthy, alas, are not easy prey. Backed by highly paid lawyers and accountants, no other group is better able to run circles around the taxman. As a result, America’s politicians may get less cash than they bargained for and more economic distortions.

Tax Goldman debate heats up

The idea of taxing Goldman Sachs and other banks that engage in prop trading is heating up.

I fully endorsed the idea in a column on Thursday. (i amended my thoughts a bit from earlier in the week). FDIC Chairman Sheila Bair seems to be talking about a similar bailout tax concept. And we may hear more from Bair on the subject next Thursday when she is set to testify before the Senate Banking Committee.

Tax Wall Street trades

Reports of the death of the investment bank have been greatly exaggerated, as Mark Twain might have put it. It was just 10 months ago, after Goldman Sachs and Morgan Stanley quickly converted themselves into bank holding companies, that nearly everyone had written off investment banking. All those predictions about Wall Street firms becoming less profitable and boring places to work seem laughable in light of Goldman’s blowout second-quarter profits and JPMorgan Chase’s equally impressive earnings.

Now all the chatter is about how little things have changed on Wall Street, with trading revenues and fees from underwriting stock deals padding the bottom lines of both banks. Back in September, The New York Times ran a lengthy article headlined “Wall Street, R.I.P.: The End of an Era.”

Tax Goldman

Goldman Sachs is entitled to make as much money as it wants from proprietary trading–that is trading stocks, bonds, currencies and bonds for its own account. But as long as Goldman benefits from bonds it sold with a government guarantee, it should pay an extra tax on those prop trading gains.

The Wall Street Journal editorial today proposed a tax along this lines and I think it’s a good idea. It’s not often I find myself in agreement with the WSJ editorial page, but the paper’s edit writers are right in calling for an “FDIC bailout tax.”

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