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March 13, 2010; The Guardian | Around the world, particularly in the U.K., there is active public discussion of a “Robin Hood tax” on the financial transactions of banks. In the U.K., 140,000 people have signed on to the Robin Hood tax campaign. It is an issue facing the Labor government of Gordon Brown as it heads into general elections, and it is on the agenda of the G20 nations (which includes the U.S.).
The idea didn’t come from some loons anxious to stick it to the financial sector, but has been advocated by the likes of Jeffrey Sachs of Columbia University and Nobel Prize winning economist Joseph Stiglitz. It has been debated by U.S. institutions, such as the Chamber of Commerce, which has declared that the tax would cause the stock markets to plunge from the current Dow Jones level of around 10,000 to about 8,750 and mutual fund dividends from 2 percent to 1.75 percent.
Well known charities such as Oxfam, Save the Children, Greenpeace and the U.K. version of the Salvation Army have weighed in positively about the tax, especially the notion that the proceeds would be devoted to poverty reduction or environmental programs.
Sachs’ idea is a 0.05 percent tax on every bank transaction, suggesting that the financial sector is “undertaxed” and “out of control,” earning record profits during the Great Recession as a result of government (taxpayer) bailouts and the Federal Reserve’s zero-interest-rate policy. His most widely quoted statement is that bankers “are brazenly smirking as they pocket large amounts of our money.” Sachs and other economists suggest that the tax would be progressive, fair, and well within the ability of the banks to pay.
Where’s the debate in the U.S.? Other than the Chamber, the other major players weighing in, Bernanke at the Federal Reserve and Geithner at Treasury, are publicly unenthusiastic.
Where is the nonprofit sector on this revenue generator that would benefit nonprofit programs? The silence is deafening. In the U.K., Goldman Sachs has been charged with spamming the Robin Hood campaign Web site, but the U.S., nonprofits are lining up with adulation to tap Goldman’s promise of $1 billion in new philanthropic giving (as a result of its record profits and bonuses in 2009).
And foundations all shiver when there is a tax that, despite its hugely beneficial societal impact, would reduce the value of foundations’ equity investments—see the foundation cold shoulder to U.S. efforts to increase the tax on stock dividends.
Given the national and international government budget crises, nonprofits will be able to stave off budget cuts if and only if they come up with new ideas on raising revenues. With the populations in other Western nations hot to trot on the Robin Hood tax, the U.S. nonprofit sector’s silence is unbecoming.—Rick Cohen