Has Rep. Pete Stark been watching too much of the cult movie classic Office Space? Stark's proposal to enact a micro currency tax on financial transactions favored by the world's largest firms sounds like it was pulled straight out of a scene from the 1999 comedy starring Ron Livingston and Jennifer Aniston.
Peter Gibbons: [Explaining the plan] Alright so when the sub routine compounds the interest is uses all these extra decimal places that just get rounded off. So we simplified the whole thing, we rounded them all down, drop the remainder into an account we opened.And scene! Of course, the difference here is only Wall Street would characterize Stark's House bill taxing each financial transaction 0.005 percent as "stealing". The bill is a response to economists who have pilloried Wall Street for using computer technology to accrue large amounts of microprofits from their trades.
Joanna: [Confused] So you're stealing?
Peter Gibbons: Ah no, you don't understand. It's very complicated. It's uh it's aggregate, so I'm talking about fractions of a penny here. And over time they add up to a lot.
Peter Gibbons: Um... the 7-11. You take a penny from the tray, right?
Joanna: From the cripple children?
Peter Gibbons: No that's the jar. I'm talking about the tray. You know the pennies that are for everybody?
Joanna: Oh for everybody. Okay.
Peter Gibbons: Well those are whole pennies, right? I'm just talking about fractions of a penny here. But we do it from a much bigger tray and we do it a couple a million times.
"Wealthy traders and big financial institutions make huge bets on the fluctuations in currency value and they can make massive profits if their bets are correct," wrote Stark in both the Huffington Post and The Hill. "This type of speculation helped to worsen the recent financial crisis and serves no purpose other than making a few people and institutions even richer.
The op-ed piece links to a 2009 column by The New York Times columnist Paul Krugman, who referenced the idea first originating in 1972 with Nobel-winning economist James Tobin who beleived such trading was "socially useless." "Such a tax would be a trivial expense for people engaged in foreign trade or long-term investment; but it would be a major disincentive for people trying to make a fast buck (or euro, or yen) by outguessing the markets over the course of a few days or weeks," wrote Krugman.
Stark has never been much of a friend of corporate America and the bill goes a long way in stoking the populist anger levied recently towards Wall Street. "For the average person or business, this small tax will hardly be noticed," said Stark. "But, due to the extreme speculation that takes place, it would raise significant funds." Starks says such a tax would "raise $28 billion a year and reduce currency speculation by 14 percent."
One sticking point may be the bill's use of the proceeds to fund specific programs and causes such as "children, global health, and climate change mitigation."
Aside from that, someone in Stark's Fremont office may soon be losing their coveted Swingline stapler. We know who you are.