A minuscule tax on financial transactions proposed by congressional Democrats would raise more than $350 billion over the next nine years, according to an analysis by the Joint Tax Committee, a nonpartisan congressional scorekeeping panel. The analysis was sent Monday to the offices of Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.), the lawmakers who proposed the tax, and provided to The Huffington Post. The Wall Street Trading and Speculators Tax Act would impose a tax of 0.03 percent on financial transactions, meaning that longterm investors would barely notice it, but traders who move rapidly in and out of positions would feel its sting and, the authors hope, reduce the volume of their speculation in response.

This tax makes good sense for a variety of reasons. It provides a slight disincentive to speculation, and a larger disincentive to high-volume, high-churn speculation. Long-term investors, however, would be nearly unaffected. This is the first I've heard of a solid revenue estimate attached to the idea, but $35 billion a year is nothing to sneeze at either.

As Grim notes, such a tax would probably only work if it were adopted across most major trading centers so that it couldn't be easily circumvented. Europe, however, is already working on a similar measure, and there may perhaps be other measures available to penalize offshore transactions that attempt to skirt the tax.

Frankly, my own views are more draconian. Wall Street is so obsessed with large-scale profits that older, steadier investment vehicles (utility companies, for example) are mostly pooh-poohed. Case in point: Enron, who found that they could make far more money speculating on energy than they could in actually providing any. (Similarly, corporate critics also grumble that the obsession with quarterly numbers has long eclipsed notions of sensible long-term corporate governance.) Any tax that hinders the worst speculators and encourages more money to flow into longer-term business investments sounds like a good idea to me: this would seem one of the most logical ones.

