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Comment by jonahbenton | Hacker News Reader

"...forcibly take money from everyone who was financially responsible..."

I am no fan of Bernie's but this description is completely wrong. A transaction tax would have little to no impact on ordinary savers/investors. It would have zero to do with credit card debt. It would at most represent a slight redistribution from assets generally controlled by the 0.1% to the top 50%.

The place where that tax would pull from in the financial system is currently mined by HFT bots. To the extent that this impacts you, you are already being skimmed by them, you just don't know it.

The financial system is REALLY REALLY big. Hundreds of $T change hands DAILY.

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It's your description that is completely wrong.

A transaction tax has been tried before in Sweden[1], had disastrous effects on their stock markets, and had to eventually be repealed.

I don't think most people appreciate how efficient the US markets are today, relative to what they were like 20 years ago. HFTs do make a lot of money, but its a extremely small amount compared to the total size of the financial system [2], and it is decreasing rapidly each year as the competition increases.

If we impose a transaction tax, market makers who are already on razor thing margins will increase bid-offer spreads, volatility will increase, and it will become way more expensive on average to trade. There's a reason why you can trade virtually for free on your personal account today, vanguard is able to offer you 0.1% in management fees, etc. These things did not exist 20 years ago.

Its a common myth that HFT's are "stealing" money from investors, but if these firms were not in the markets, it would almost certainly be detrimental to the ordinary saver/investor.

Bernie definitely wouldn't be able to raise nearly as much money as he would need from this tax, and it would hurt the economy. Him and his advisors know it, but he just wants to pander to the anti-wall street sentiment while also making it seem like his proposal isn't completely fiscally irresponsible, which it is.

[1] https://en.wikipedia.org/wiki/Swedish_financial_transaction_...

[2] https://www.ft.com/content/d81f96ea-d43c-11e7-a303-9060cb1e5...

Frankly I don't disagree, in the sense that this is largely a BS (pun intended) proposal from someone who does not understand how finance works. I am not a fan of Bernie.

But these particular counter arguments, such as they are, miss the forest altogether.

Sweden is...not the US. It's basically Ohio. Trying something in an Ohio that is not on the dollar does not tell you anything.

Some kinds of efficiencies in the US system are laudable, others are deeply problematic. Solving for e.g., humans trading on their personal accounts is a demonstrably terrible idea from a retirement savings perspective at scale.

The fundamental point is that in the US and in most of the world there is a deepening imbalance between capital and labor. And labor is going to have its say unless capital figures out how to share.

There are lots of ways this can go horribly wrong. Lots of current events rhyming with bad moments in history. Trump is this gone wrong. Bernie would be too.

A redistribution of wealth is coming, one way or another.

Money is fungible. Saying that the expenditure is funded by a tax on Wall Street is just clever bullshit to make it look like the taxpayers aren't on the hook for this absurdly expensive amnesty. The truth is those are two entirely orthogonal issues that affect the federal budget. If not this amnesty, the tax could fund something else. If this tax isn't enough, the money for this bill will come from somewhere else.

If it's clever messaging and it works, it works. Some cohort in the country is going to be on the hook; it's up to democracy to pick which cohort that is (congressional representation, all that jazz).

Right now, Millennials are on the hook (carrying the debt). They're also now the largest voting cohort [1], having edged out Boomers this year [1]. Do you think they're going to stay on the hook? It's unlikely (~1.6 million Boomers die each year, about 1.3 percent of the Boomer cohort); Millennials will continue to reshape state and federal government each election cycle.

I imagine the cohort of voters who took on large amounts of student loan debt and successfully paid it off in a short duration of time is exceedingly small (but vocal!). Life isn't fair.

[1] https://www.pewresearch.org/fact-tank/2018/03/01/millennials...

Money is a lot of things. It is fungible. It is also an asset.

The amount of wealth- assets- outside of their houses that taxpayers who are not in the .1% hold has become an increasingly tiny fraction of the overall total asset base- which VASTLY exceeds the tax base that people are accustomed to thinking about (taxes on their income).

Taxing the trading of these assets between one huge asset holder and another involves flows of money that generally speaking have nothing to do with most people. An analogy is- you're here in a nearly empty swimming pool a block from the beach and Bernie is talking about bringing in a pipe and a desalination plant to refill it, because there's a lot of water in the ocean.

Regarding the budget, to a first approximation, these loans do not have an impact at all. Where the Govt actually holds the asset, it is merely a fiction on the balance sheet. There is no "student loan interest payments" line item on the Treasury's income statement (https://www.fiscal.treasury.gov/files/reports-statements/mts...). Where the govt is a guarantor, then there are private entities that do expect to be paid, and it would be good for the govt to not be put in the position to have to pay them without another source of revenue.

And it is absolutely true that from a particular perspective a transaction tax can provide an extremely useful source of revenue in the future, perhaps even offsetting personal income taxes.

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