[Peace-discuss] Fw: permanent icome tax increase

Mon Jul 3 18:15:29 UTC 2017

State Senator Daniel Biss, who is a Democratic candidate for governor, is a
cosponsor of SB1970, the Financial Transactions Tax/LaSalle St. Tax bill.

http://www.ilga.gov/legislation/BillStatus.asp?DocNum=1970&GAID=14&DocTypeID=SB&LegId=105339&SessionID=91

Bill Status of SB1970  100th General Assembly

Short Description:  FINANCIAL TRANSACTION TAX

Senate Sponsors
Sen. Omar Aquino - Jacqueline Y. Collins - Ira I. Silverstein, Cristina
Castro, Daniel Biss, Iris Y. Martinez and Patricia Van Pelt

[...]

Synopsis As Introduced
Creates the Financial Transaction Tax Act. Imposes a tax on the privilege
of engaging in a financial transaction that occurs, is effectuated,
consummated, executed, or cleared at a facility located in the State.
Provides that the tax is imposed at a rate of $1 per contract for all
transactions for which the underlying asset is an agricultural product and
$2 per contract for all other contracts. Effective immediately.

Actions
Date Chamber Action
  2/10/2017 Senate Filed with Secretary by Sen. Omar Aquino
  2/10/2017 Senate First Reading
  2/10/2017 Senate Referred to Assignments
  2/28/2017 Senate Added as Co-Sponsor Sen. Cristina Castro
  3/14/2017 Senate Added as Chief Co-Sponsor Sen. Jacqueline Y. Collins
  3/15/2017 Senate Added as Co-Sponsor Sen. Daniel Biss
  3/16/2017 Senate Added as Chief Co-Sponsor Sen. Ira I. Silverstein
  4/5/2017 Senate Added as Co-Sponsor Sen. Iris Y. Martinez
  4/21/2017 Senate Added as Co-Sponsor Sen. Patricia Van Pelt

===

Financial Transactions Tax (LaSalle St. Tax)
http://www.faireconomyillinois.org/financial-transactions-tax-lasalle-st-tax/

Tax “LaSalle Street” to Meet Human Needs.
Co-sponsor SB 1970

(1 ) What is a “LaSalle Street” Tax?
A “LaSalle Street Tax” or financial transactions tax (FTT) is a very small
tax on the trading (buying/selling) of financial assets such as stocks,
bonds, currencies and derivatives (futures and options) based on these
assets. It is essentially a sales tax, such as when we buy/sell shoes or
computers. “LaSalle Street” has come to mean the financial/trading
district, the “Wall Street’ of the Midwest.

(2) Why Illinois?
Illinois has two of the largest financial markets in the world, the Chicago
Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE).
Each year the value of products traded on these two exchanges totals well
over $900 trillion.

(3) How would a LaSalle Street tax (LST) work in Illinois?
Proposals for a LaSalle Street Tax that have been submitted to the Illinois
State Legislature call a $1/contract fee on all agricultural futures and
options traded on these two exchanges and a $2/contract fee on all other
futures, futures options and options traded on these two exchanges with the
exception of options on individual stocks. Average contract size at these
exchanges is more than $225,000, so this tax amounts to less than 2/1000 of
a percent of average contract value.

(4) That doesn’t sound like a very big tax – would the LST raise much money?
Yes, the tax rate is very low but, because the amount of trading is so
large, the proposal would raise between $10 and S12 billion per year for
Illinois.

(5) Wow! But can the exchanges afford to pay this tax? Wouldn’t they move?
The LST is not a tax on the exchanges; they don’t trade. It is a tax on the
buyers and sellers of futures and options contracts traded in the
exchanges. The exchanges would simply act like the hardware store that
collects the sales tax when you buy a hammer. And then sends the tax to the
State of Illinois.

(6) Are there any experiences with Financial Transactions Taxes in other
parts of the world?
The United Kingdom, Switzerland, Hong Kong, Australia, France, and
Singapore have such taxes. These are all large markets, the tax had been in
place for years without hurting these markets, and exchanges have not moved
away. In addition, 10 European countries are working toward implementing an
FTT in late 2017.

(7) I don’t know anyone who trades on the CME and CBOE. Who are they? Can
they afford this tax?
Few of us know anyone who trades on these exchanges, because the vast
majority of trading is done by large banks, hedge funds — financial
institutions in general — other large businesses, and wealthy individuals.
None of these would be hurt significantly by the proposed LST. There would
be a reduction in what is called “high frequency trading,” where traders
buy and sell the same contract within seconds but reducing such trading
will not harm the economy. In fact, these high frequency trades are
considered destabilizing gambling, so it would amount to a ‘sin tax.’

(8) Would these traders move to another exchange?
The products that are proposed to be taxed are not traded on any other
exchange. In addition, some of the products that would be taxed, such as
the S&P 500 index futures and options, are exclusively licensed to these
two exchanges. While another exchange could seek regulatory approval to
trade some of the other products, doing so would take some period of time.
Moving trading liquidity from one market to another is extremely difficult.
Once an exchange has captured all the volume in a product, it is difficult
for a later entry to establish a market that is attractive to traders.

(9) You compared the LST to the state sales tax. That’s 6.25%, right? How
does the LST compare?
The LST rate is much, much lower than the 6.25% for the Illinois state
sales tax. While the LST rate would vary depending on the size of the
different contracts, here are some representative figures. For example, the
size of an S&P 500 index futures contract is currently about $100,000. If a
trader bought and then later sold the index futures contract, the total tax
on the $100,000 would be $4 ($2 to buy and $2 to sell), or 0.004% — less
than 1/10th of the sales tax that you pay. Another example: a soybean
futures contract is for 5000 bushels. When soybeans are selling for
$7/bushel, the value of the contract is $35,000. Since soybeans are an
agricultural product, the LST for both buying and later selling a contract
would be $2 ($1 to buy and $1 to sell), or 0.006%, again less than 1/10th
of the sales tax we pay.

(10) OK, how could we use the money raised by the LST?
There are many good uses of this revenue. Illinois could reverse decades of
underfunding and understaffing of Human Services and human needs. It could
boost funding for public education (today Illinois ranks last in state
share of funding for education). It could be used, at least in part, to
make up for the decades long failure of the Illinois legislature to keep
their promise to fund the pensions of teachers and other public employees.
Illinois could fund thousands of jobs preserving the environment, improving
energy efficiency, rebuilding public infrastructure, etc.

(11) Sure it’s a great idea, but will it fly politically?
LaSalle Street Traders and Wall Street banksters have lots of money to
throw into opposing this idea, so many politicians are leery … but voters
like it. When asked in a ballot referendum, Chicago north side voters
supported the Financial Transactions Tax by a margin of 3-1. IL state
senator Omar Aquino has proposed the tax by introducing SB 1970.

It’s been called the most popular tax in history.

===

Robert Naiman
Policy Director
Just Foreign Policy
www.justforeignpolicy.org
naiman at justforeignpolicy.org
(202) 448-2898 x1

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On Mon, Jul 3, 2017 at 12:48 PM, Carl G. Estabrook via Peace-discuss <
peace-discuss at lists.chambana.net> wrote:

> Democrats in the Illinois legislature preferred raising income taxes to
> establishing the sorts of tax - e.g., a financial transaction tax (LaSalle
> St. tax); a wealth tax - that would annoy the 1%.
>
> Demand taxes that reduce growing and accelerating inequality. Don't vote
> for incumbents of either party unless they agree.
>
> —CGE
>
> > On Jul 3, 2017, at 10:04 AM, Dianna Visek via Peace-discuss <
> peace-discuss at lists.chambana.net> wrote:
> >
> > On Sunday, July 2, 2017 11:33 PM, Austin Berg <
> digital at illinoispolicy.org> wrote:
> >
> > The Illinois House of Representatives passed a full-year budget July 2.
> It’s the first time in two years the body has approved such a plan.
> > The revenue portion of the budget, including a permanent income tax
> hike, passed on a 72-45 vote, with 15 Republicans voting in favor. The
> spending portion of the budget passed out of the House on a vote of 81-34.
> > Unfortunately, this budget plan is no cause for celebration.
> > The plan is defined by a massive, 32 percent income tax hike on Illinois
> residents, who are now witnessing the nation’s worst income growth. If
> signed into law, the House plan will hike the state income tax rate to 4.95
> percent from 3.75 percent, and the corporate income tax rate will rise to 7
> percent from 5.25 percent.
> > The budget package is devoid of any structural spending reforms to slow
> growth in the cost of government: It lacks comprehensive property tax
> reform, constitutional pension reform, collective bargaining reform,
> reforms to Medicaid and more.
> > The spending bill has also been described as “booby trapped” in that it
> blocks money for schools unless Gov. Bruce Rauner signs an evidence-based
> school funding bill into law. This inaptly named education funding model
> has been a failure in every state in which it has been adopted.
> > Illinoisans may recall the 2011 temporary income tax hike, which also
> took a tax-hike-without-reform approach. Despite $32 billion in extra tax
> revenue, the state’s unpaid bill backlog only declined by $1.3 billion (to
> $6.6 billion from $7.9 billion), and pension debt rose by $25 billion.
> > This time, the tax hike is permanent.
> > The budget bills now head to the Senate. If approved, they will then go
> to the governor’s desk.
> > However, Rauner announced he will veto the budget in its current form.
> > Lawmakers could override the governor’s veto with a three-fifths
> majority vote in each of the House and Senate, which is currently the same
> share it takes to send the budget to the governor’s desk in the first place.
> > Below is the roll call for Senate Bill 9, which contains the permanent
> income tax hike.
> > Democrats voting yes (57): Ammons, Andrade, Arroyo, Beiser, D. Burke, K.
> Burke, Cassidy, Chapa LaVia, Conroy, Conyears-Ervin, Crespo, Currie,
> D'Amico, Davis, DeLuca, Drury, Evans, Feigenholtz, Fine, Flowers, Ford,
> Gabel, Gordon-Booth, Greenwood, Guzzardi, Harper, G. Harris, Hernandez,
> Hoffman, Hurley, Jones, Kifowit, Lang, Lilly, Madigan, Mah, Martwick, C.
> Mitchell, Moeller, Nekritz, Phelps, Riley, Rita, Sente, Sims, Slaughter,
> Soto, Stratton, Tabares, Thapedi, Turner, Wallace, Walsh, Welch, Williams,
> Willis, Zalewski.
> > Republicans voting yes (15): Andersson, Bryant, Cavaletto, Davidsmeyer,
> Fortner, Hammond, D. Harris, Hays, Jimenez, Meier, B. Mitchell, Phillips,
> Pritchard, Reis, Unes.
> > Democrats voting no (10): Connor, Costello, Halpin, Manley, Mayfield,
> Moylan, Mussman, Scherer, Stuart, Yingling.
> > Republicans voting no (35): Batinick, Bellock, Bennett, Bourne, Brady,
> Breen, Butler, Cabello, Demmer, Durkin, Frese, Halbrook, Ives, Jesiel,
> Long, McAuliffe, McCombie, McDermed, McSweeney, Morrison, Olsen, Parkhurst,
> Reick, Sauer, Severin, Skillicorn, Sommer, Sosnowski, Spain, Stewart,
> Swanson, Wehrli, Welter, B. Wheeler, K. Wheeler.
> > Republicans not voting (1): Winger (excused absence).
> >
> > Austin Berg
> > Senior Writer
>
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