Adam Lent
The right-wing bloggers are slowly beginning to lay into the campaign for a Robin Hood Tax which was launched today. Two early starters have taken the usual patronising tone describing the idea as a “fairytale” and ”lunatic“.
All the usual arguments are being wheeled out as they were by an editorial in The Times back in December (which I responded to then). But before the Tory trolls get too dismissive, they might like to note the fact that we have had a form of this fairytale lunacy for many decades in one form or another – it’s called Stamp Duty, i.e. a transaction tax on share dealing. Nigel Lawson (that simple-minded lefty) cut the rate of Stamp Duty in 1986 but extended its application to previously exempt forms of share dealing in the shape of Stamp Duty Reserve Tax.
Comment made by Tim Worstall on Feb 11th 2010 at 7:21 am:
Indeed, Stamp Duty. And when the incidence of Stamp Duty has been studied…that is, who actually carrys the economic burden, we find that it is a) pension funds in the form of lower returns and b) companies facing higher capital raising costs.
It’s this pesky”tax incidence” thing again. Just because you desire that the tax should be paid by the pinstriped bankers doesn’t mean that the effect is that the tax is paid by the pinstriped bankers.
Given that the aim is to raise $400 billion from a sector that makes $800 billion globally (their figures) it’s obvious that there are going to be at least some shifting of that burden.
Trackback made by Liberal Conspiracy » Why progressives should back the Robin Hood Tax on Feb 11th 2010 at 1:01 pm:
[...] More Robin Hood Tax: the right wing blogosphere gets to work [...]
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[...] people that realise you have to think through consequences beyond Stage One; such as Tim Worstall here, for example. Taxes change incentives, and change industrial structure. Can the proponents of [...]
Trackback made by Masters of the Universe but not of online polls! | ToUChstone blog: A public policy blog from the TUC on Feb 12th 2010 at 2:00 pm:
[...] using the same IP address over and over again you might just get caught. Maybe they believed the right wing blogs and thought the Robin Hood Tax campaigners would be too dim to work it out. Anyway the Goldman [...]
Comment made by Richard Murphy on Feb 12th 2010 at 5:01 pm:
Worstall is just a tiny bit right, as a new report to be published on Monday shows
He’s wrong as well: pension funds do not have to trade in the volumes they do, quite unnecessarily and when stamp duty is only a part of trading cost – the larger element of which is designed to suck reward out of pension funds towards bankers and pension fund managers
Second, pension funds are only about 17% of the stock market. Odd they pick up all the incidence then
Third, stamp duties are not charged on new issues of shares, so he’s wrong there
0.5 out of ten then
Comment made by Tim Worstall on Feb 12th 2010 at 5:07 pm:
“Third, stamp duties are not charged on new issues of shares, so he’s wrong there”
I didn’t say they were. Only that share prices as a whole are depressed as a reult of Stamp Duty, meaning that issues of new shares will be at a price lower than they would be in the absence of the duty.
“Second, pension funds are only about 17% of the stock market. Odd they pick up all the incidence then”
Again, didn’t say they did. Only that they pick up part of it.
I’m looking forward to this report of yours on Monday you know Richard. I’m extremely interested in seeing which bits of economics you’ve managed to misunderstand this time.
Comment made by Adam Lent on Feb 12th 2010 at 5:21 pm:
Tim,
I know you and Richard have ‘history’ but keep it nice.
That aside, I’d be interested to know whether those unambiguous calculations of the incidence of stamp duty are based on theoretical analysis and modelling or hard empirical evidence. I just wonder because I’ve slightly lost my faith in what the former has to say about financial markets in recent months.
On a separate point, if you really worry about damage to pension funds and the capacity of and cost to business of raising capital, I suggest you argue for much tighter market regulation. The crash of 2008 has done incalculably more damage to both of these than the incidence of a small tax.
Comment made by Tim Worstall on Feb 12th 2010 at 5:44 pm:
Oxera calculations for a report financed by the LSE. That latter might lead to a tad of suspicion: but then one might also be wary of a report financed by the TUC: pipers, tunes and all that.
My objection though to the Robin Hood thing is rather more than that. They state, unequivically, that people who buy foreign exchange, send remittances, invest in a pension fund or take out a mortgage will not lose from this tax. But if the tax has any effect at all upon margins and spreads in hte industry (which of course it will) this statement is false.
Flat out false.
Comment made by Cadoret on Feb 15th 2010 at 3:24 pm:
Hmmnnn… ‘Timbo’ Worstall claims that “Oxera calculations for a report” might be suspect because it is “financed by the LSE”….
Now, I may be going a little off topic (I’ll come back in a mo, honest!), but he’s rather cagey talking about UK Income Tax he pays, if any – and of course it’s his right to keep this information to himself. And he assures me that he doesn’t get “a pay cheque, cash or anything else from banks, bankers…”, and of course, I have no reason to doubt him.
But I wonder if his objection to the Robin Hood Tax is because he’s worried about it spreading to the Commodities Markets? Like Metal Dealing, perhaps?
Surely not? Perhaps he’d like to let us know?
But in any case, you can read more about his opinions on the Robin Hood Tax at http://timworstall.com/2010/02/10/more-robin-hood-tax/ where he’s inviting like-minded people to have a a whip round at “the banks and hedge funds (trivial amounts [sic] each: £10k, £20 k each perhaps)…” to fund an Anti-Robin Hood Tax campaign or think-tank…
Or could it be that he’s stopped posting his own views, and has moved the campaign somewhere else since the public posts started moving in support of the tax? Ooops!
Comment made by Tim Worstall on Feb 15th 2010 at 3:55 pm:
“But I wonder if his objection to the Robin Hood Tax is because he’s worried about it spreading to the Commodities Markets? Like Metal Dealing, perhaps?”
Sorry Cadoret, no, not even that. I’m a wholesaler of metal. I move physical quantities of metal from one place to another, refining it if needs be.
Don’t trade in the metals exchanges (the metals I normally deal with aren’t even traded in exchanges), don’t deal in futures and only once, in a period of 15 years, have I even considered the purchase of an option on a metal. And that was a hedge where I had to hold material for several weeks and the price was volatile. That is, you know, real, proper hedging, not speculation.
Comment made by Ged barker on Feb 15th 2010 at 4:17 pm:
I have been thoroughly enjoying watching the RHT opponnents – as their tired arguments fall short they simply scuttle from comment board to comment board in search of an audience.
RHT: Not complicated, just brilliant:
http://www.robinhoodtax.org.uk
http://www.facebook.com/robinhoodtax