Wednesday, September 2, 2009

Tobin Tax

The Tobin tax is a tax on Financial transactions, particularly foreign currency transactions. This article is a good discussion of its pros and cons, and the political implications.

But should we eliminate the financial system? I proposed two ways. We can simply say that firms should sell their securities directly to the public. But there is no secondary market. ONe gets ones return from the interest for a bond or similar transaction or eventual dividends in the case of a stock.

Or one can go for a share economy which eliminates the distinction between stocks, bonds and salaries. All receive a share of income. That could be a share of a company's revenue (serving the role of a security), or a share of an individual income. The latter replaces mortgages, personal loans and educational loans. Instead of people graduating with twenty thousand in debt from college, they agree to give back eight percent of their income to the University that hired them.

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