TAX the LIEs - used to be: New financial reform direction that may be easier to swallowSubmitted by tamckissick on Thu, 09/23/2010 - 15:41
Today's theme seems to be rather concentrated on lies so I thought I'd see if there were any new opinions on an idea that fizzled a while ago....
In recent discussions and debates I've been part of, numerous problems have arisen in relation to one path or another. In looking for a common solution to all of them, I think I've stumbled on a pretty good solution. I think it works for the people, the government (political clout), big business, small business, small banks and everyone else that's not a big bank.
The solution? Tax Leveraged Interest Earned or LIE. Use this formula as a great start. Take every loan, stock sale, derivative, discount window open market transaction, ECB bailout support loan, dark pool windfall or secret financial action. Calculate how much skin the interest earner has in the game. In other words, if they leveraged 33-1, then they have 3% of their own money in the deal. Double that number to get 6%. Subtract that from 100% to get 94% and that's their final tax rate on that profit. You make a loan with at least half of the money coming from your own pocket, you pay no tax. Anything less and your tax rate ramps at double your leverage amount. You make full risk bets on the market like naked short selling, you get taxed 100%. This way we don't have to outlaw these activities. We just make them unprofitable.
The great part of all this is public perception. We promote it as only a tax on the windfall profits of the really bad transactions of the really big banks. What main-street voter wouldn't be for that? We show how these transactions are actually so massive that this one tax would pay off the deficit each year and even allow us to eliminate all other taxes. (I estimated some numbers after reading some relevant info and I believe this to be true) This should make it politically easier to accomplish. How could the banks possibly argue it in the public eye? Granted, they'd be strongly against it, but I don't see them making their case to the public.
What do you guys think?