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Transaction tax

Tobin tax

A transaction tax specifically relating to currency transactions is called a Tobin tax. 

Robin hood tax

Sometimes it is called a robin hood tax, because it is supposed to target the rich and give to the poor. The problem with this analogy is that it is wrong.
Robin Hood was fictional, but he would steal off the rich, because the rich got rich by force, not by earning it. So in effect Robin Hood was only returning money back to its rightful owners. In the modern world, there are laws to stop rich people forcing money out of poor people. People hand over their money voluntarily by choice these days. Therefore there is no right to other peoples money.

In Robin hood the Sherif was the evil character, because he taxed the population too much and spent wastefully on banquets. Robin Hood was the good guy because he robbed the rich, which were closely aligned with the sherif at that time. Then supposedly he gave to the poor. What we have today is a merging of the Sherif and Robin Hood into one person. The government robs everyone, wastes on bureaucracy and gives a small portion to the poor. They can do what they want, because they always point to the robin hood aspect of their personality and say I am the good guy. But the sherif aspect is still there overtaxing/stealing and cowering behind the popular Robin Hood element.

More aptly the tax should be called a Sheriff of Nottingham tax. There are several reasons for this:
  • Robin Hood didn't tax, the Sheriff of Nottingham did
  • Robin hood did not spend wastefully, the Sheriff did
  • The tax will increase the cost of currency transactions to everyone who uses them regardless of wealth. Essentially taking off the poor.

Other problems include

A Tobin tax would:
  • Make everyone pay more for transactions
  • Reduce liquidity in markets
  • Increase volatility
  • Increase administration costs
  • It doesn't remove currency movements, if a country really cares about its exchange rate it should promote a strong economy, or devalue the currency.
  • Less transactions would take place, reducing taxable profits of firms, cancelling out any income to governments.
  • Once introduced at a small rate, sucessive governments will keep increasing the rate (just like income tax).
  • One country doing it alone would not work.
  • Share values will fall hurting pensioners
  • Interest rates will be lower hurting pensioners

The Tobin tax was tried in Sweden 1984, and was a miserable failure, it was abolished in 1990.

  • Reaching into your own pockets to help your fellow man is praiseworthy and laudable
  • Reaching into someone elses pockets is despicable and deserves condemnation
  • One of the ten commandments was "Thou shall not steal", it wasn't "Thou shall not steal unless you have a majority vote in government".
  • Redistribution is tragic, but it sells to those who buy the politics of envy
  • Robin hood in reverse in place, redistribution upwards.