Rob and the rich and feed the poor?

December 7, 2011

Political Theory


Most people can agree that the reason for the economic downfall was, for the most part, caused by irresponsible activity by big banks and risky financial transactions.  The public suffered, some banks were bailed out by the government, and the CEO’s continued to receive their lofty, and maybe, undeserved, bonuses.  So, here’s an idea:  Why not make the banks give back what they took from the poor and then some?

This new idea of taxing trades on stocks, bonds, and other big financial transactions has taken root, and it is known as the Robin Hood Tax.   It has  gained popularity and support from countries in Europe, and other big, names, such as Bill Gates, Al Gore, Ralph Nadar, and even the Pope.  Surprisingly enough, this new idea has also gained support from the Occupy Wall Street movement as well, who see this idea as a way to give back to the 99 percent.  Many people feel that for just a very small tax on the financial sector, billions could be generated to fight problems such as poverty in the world, among a multitude of other issues.  I think Rawls would support this plan, because many people, who are poorly off now, would benefit greatly, showing that there is immense opportunity for their lives to improve if this plan were to be implemented.  Also, he would most likely support it because it is a great way to ensure that those with lower incomes are not put at as many disadvantages, simply because they were born into a poor family.  Below is a video promoting the Robin Hood Tax in the U.K.  It is important to note how little the banks would be taxed under this plan, and how great of a benefit it could generate:

While this may seem like a no brainer and a simple way to help the poor and the rest of the 99 percent, some still feel that this plan could have its drawbacks.  For example, the Obama administration is against the plan, feeling that it may push trading overseas, further hurting the economy.   I feel like Rawls would disagree with this view, however, because the tax would only slightly hurt the top percentage, while still benefiting the poor and the disadvantaged.  Rawls would probably feel as if the small tax is something that the wealthy needs to take upon themselves, to level the playing field and increase fairness amongst the population.  Hopefully the wealthy recognizes this small responsibility that they should take upon themselves to benefit a larger portion of people.  Rawls also believes in “taxation as a scheme of cooporation”.  Taxes allow those who have gained so much from society to give back, and the Robin Hood tax gives the especially wealthy a chance to give back to society what they owe.

Is the Robin Hood Tax fair?  Even if it is fair, do you think it would drive economic activity out of the country, further hurting the economy?

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8 Comments on “Rob and the rich and feed the poor?”

  1. afadel Says:

    I disagree with your premise that the financial crisis was caused by Wall Street. Wall Street played a role, but was definitely not the main culprit. The financial crisis was a function of the mortgage meltdown, which was caused by irresponsible fiscal and monetary government policies. For a detailed explanation, see this:

    The Robin Hood tax is not fair. You do not fix one evil (the bail outs) with another (taxes). The quantity of the tax is irrelevant. This is a moral question, be it a 0.005% or a 99% tax. Bottom line, it’s not a proper function of government to control the buying and selling of commodities or securities.

    “Robin Hood… It is said that he fought against the looting rulers and returned the loot to those who had been robbed, but that is not the meaning of the legend which has survived. He is remembered, not as a champion of property, but as a champion of need, not as a defender of the robbed, but as a provider of the poor. He is held to be the first man who assumed a halo of virtue by practicing charity with wealth which he did not own, by giving away goods which he had not produced, by making others pay for the luxury of his pity. He is the man who became the symbol of the idea that need, not achievement, is the source of rights, that we don’t have to produce, only to want, that the earned does not belong to us, but the unearned does. He became a justification for every mediocrity who, unable to make his own living, has demanded the power to dispose of the property of his betters, by proclaiming his willingness to devote his life to his inferiors at the price of robbing his superiors. It is this foulest of creatures—the double-parasite who lives on the sores, of the poor and the blood of the rich—whom men have come to regard as a moral ideal. And this has brought us to a world where the more a man produces, the closer he comes to the loss of all his rights, until, if his ability is great enough, he becomes a rightless creature delivered as prey to any claimant—while in order to be placed above rights, above principles, above morality, placed where anything is permitted to him, even plunder and murder, all a man has to do is to be in need. Do you wonder why the world is collapsing around us? That is what I am fighting, Mr. Rearden. Until men learn that of all human symbols, Robin Hood is the most immoral and the most contemptible, there will be no justice on earth and no way for mankind to survive.” -Atlas Shrugged

  2. dcmiller93 Says:

    I’m glad the libertarian before me was able to adequately respond to some of the more extreme points you made in your post because I would like to do something I rarely do and that is defend President Obama’s stance on the issue of a “Robin Hood” tax. You say that the White House opposes such a measure because it would force business overseas in search of a less oppressive tax system but then respond by saying “Rawls would disagree with this view, however, because the tax would only slightly hurt the top percentage, while still benefiting the poor and the disadvantaged.” This is a perfect example of the fallacious mixture of empirical and normative arguments. It doesn’t matter what Rawls would prefer, a tax on the financial sector would force businesses away – case closed. You could argue that banks wouldn’t leave the United States even with this new tax, but when we discuss real world actions, it’s real world consequences that matter.

  3. weinben Says:

    The tax is a good idea. For those opposed, you must consider that Europe is already undergoing plans to permit legislation that will cover the entire European Union. Nobel prize winners Joseph Stiglitz and Paul Krugman are heavily in favor, as are Warren Buffet, George Soros, and Jeffery Sachs. Angela Merkel, the Chancellor of Germany, who has guided Germany to economic stability and the beacon of European finance, also supports it. Those who do not support, manly the United States and Britain, it fear that it will ultimately stain the financial industry and cause more unemployment in the fields of finance and banking, corporate business, and retail from estimates of .5 per cent to over 5 per cent more than what they are currently. But these are just projections and there are opposing sets of data which says the overall benefits (increase in public welfare, investment in infrastructure, health care and education) outweigh the possible temporary losses. However, it seems the main criticism is that people believe the tax is unfair. However, why it is unfair is never discussed- just that is it, and should be accepted. I agree that using Rawls’ argument might be misguided because economic theories often fail in the face of real world application because they require such stringent adherence. But we should look to another philosopher for more applicable guidance: Edmund Burke. To generalize one of his more poignant points, tradition is the best source of information and teaching on how to act and gauge future actions. The tax, the two above posts say, would drive business away. But to where? These financial players that the tax would most effect do not have realistic options to relocate their businesses because all of Europe would be subject to this tax and it is highly unlikely they would move to China or Indian given the young state of both country’s financial industries. It is essentially a small cap on the financial industry, which has already grown too large. The concentration of wealth seen from big financial guys is unhealthy for a the general well-being of a country. Returning to Burke, it is hard for Americans to look back into their past and see the results of a time when the distribution of wealth was so lopsided because we are a very young country. But looking to Britain, France, Germany, and many other European countries with histories thousands of years old, and you can see that eventually, once the concentration of wealth becomes unbearable for the mass majority, the generally public strikes back, often in revolution. The unfair share of wealth is what caused the revolutions in almost every European country and what gave birth to the idea of democracy- economic equality, or at least a more reasonable and fair division of it. You cannot blame people with no resources that they simply don’t work hard enough when there is nothing to work it. You can even look back at the state of America during the 1870s to the 1960s. The 1870s saw huge industrialists form monopolies and procure enormous fortunes while many Americans were living in poverty. The gap in wealth grew until the 1929 Wall Street crash. After that and WWII, America was reborn as a land of true opportunity, with a lively middle class and a more equal distribution of wealth.

  4. bmazus Says:

    I believe that you are certainly missing some facts in your argument. The economic “meltdown” was not caused by “big banks.” It was a culmination of many factors, including a massive failure in the housing market, which led to our current economic predicament. People tend to forget just how beneficial these banks are to our economy. While many complain about the massive bonuses bankers are making, the work of these banks is a massive tool to our economy. They generate serious amounts of money for our economy and it is just really easy to target them.
    Another point I want to make is that these banks are extremely meticulous in every single decision they make. They have many directors and analysts hired to analyze everything down to its smallest parts before they even consider making a decision. Just because I disagree with the way you presented you argument it does not mean I disagree with the idea of the “Robin Hood Tax.”
    I think that this proposed Robin Hood Tax is a very intriguing idea. I personally do not know the specifics about it but it could be something that seriously helps out the economy. What I also wouldn’t be so sure of is how much this would affect the banks. In all likelihood the banks will not be happy with this. We shall see.

  5. bisraelb Says:

    In my opinion, this tax is a bad idea and should not be implemented. Firstly, such a tax would discourage participation in the stock market. In a time where many are afraid to invest their money, why would we further dissuade the public to purchase stocks and bonds by implementing taxes. Furthermore, I disagree with the fundamental argument that money needs to be taken from the rich and redistributed to the poor. In many cases, the poor lack financial literacy and ‘handouts’ would not allow for greater equality in the United States. Rather, I believe it would enable reckless spending and allow for the gap between the rich and poor to ultimately widen.

  6. blevz Says:

    Rawls would only agree with the tax if it ended up helping the poor, if the trading shifted overseas costin our economy jobs and profit, this could be the opposite of the case. While Rawls would certainly agree with giving aid to the poor if it comes on the backs of every worker in the economy it is certainly not worth it. If Robin Hood had destroyed the economies of the civilizations he terrorized and put as many into poverty as he helped, would he still be viewed as such a hero. Would it not seem as if he had done no good and no bad but simply taken happiness from one and given it to another?

  7. lukeythekid Says:

    Here is a post that many people are posting to their Facebook in order to demonstrate the effects of what the OWW-types are suggesting:

    Suppose that every evening 10 men go to a restaurant for dinner. The bill for all 10 comes to $100. They paid the bill the way we pay our federal taxes. The first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $17. The tenth man (the richest) would pay $60.
    0 + 0 + 0 + 0 + 1 + 3 + 7 + 12 + 17 + 60 = $100 cost of dinner
    The 10 m…en ate dinner in the restaurant every day and seemed happy with the arrangement until the owner threw them a curve.
    “Since you’re all such good customers,” the owner said, “I’m going to reduce the cost of your daily meal by $20.” Now dinner for the 10 would only cost $80.
    The first four are unaffected; they still eat for free. So, how are we to divvy up the $20 savings among the remaining six so that everyone gets his fair share? Divided among the six equally, $20 is $3.33 each, but if we subtract that from each share, then the fifth man and the sixth man would end up being paid to eat their meal.
    So, the restaurant owner worked out the amounts each should pay by using reductions proportional to what they were paying. Now the first four still paid nothing, the fifth man paid 80 cents, the sixth pitched in $2.40, the seventh paid $5.60, the eighth paid $9.60, and the ninth paid $13.40, leaving the 10th man with a bill of $48 instead of $60.
    0 + 0 + 0 + 0 + .80 + 2.40 + 5.60 + 9.60 + 13.40 + 48.00 = $80 reduced cost of dinner
    Outside the restaurant, the men began to compare their savings. “I just got a measly 20 cents out of the $20,” complained the fifth man, pointing to the 10th, “and he got $12!”
    “Yeah, that’s right,” exclaimed the sixth man. “I only got 60 cents. It’s unfair that he got 20 times as much as me!”
    “That’s true,” shouted the seventh man. “Why should he get $12 back when I got less than $3? The wealthy get all the breaks!”
    “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor.”
    0 + 0 + 0 + 0 + (-.20) + (-.60) + (-1.40) + (-2.40) + (-3.40) + (-12) = (-$20) savings on dinner
    Then the nine men surrounded the 10th and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something: they were $48 short!
    And that, boys, girls, and college professors, is how America’s progressive tax system works. Those who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more.
    After all, there are lots of good restaurants in Monaco and the Caribbean.

    Read more: The Herald-Sun – Dinner for ten A parable of tax cuts

    • lukeythekid Says:

      People believe that the leaders on Wall Street were responsible for the economic collapse, and in a way they are partially right. However, they should not be so quick to point the finger, because many of them are hypocrites. The same people that are clamoring for a handout are those who bought 2, 3 homes with no way of paying their mortgage tried to take advantage of the system. Banks are obviously looking out for themselves, so they had no choice other than to hide all of the bad credit – this just kept building up until the whole country went to hell. This was an unsustainable system, where every person who was careless and irresponsible with their own credit is just a guilty as those who covered it up.

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