With the “Robin Hood Tax,” a Grassroots Movement Seeks to Bring Wall Street to Heel

Across the country, movements are rising up to challenge politicians who balance public budgets on the backs of working people instead of taxing corporations. “Municipal frugality” and “shared sacrifice” are examples of the political doublespeak and hypocrisy that governments employ while the 1% hoards its record levels of wealth.

In May, National Nurses United and student groups gathered in the nation’s capital to join Democratic presidential contender Sen. Bernie Sanders to announce his introduction of the Robin Hood Tax bill, which proposes a small levy on Wall Street financial transactions. A burgeoning, national movement has sprung up in support Sander’s legislation. The bill has not made it out of the Senate Finance Committee. Economists backing this proposal, such as Nobel Prize winners Joseph Stiglitz and Paul Krugman, estimate the 0.5 percent tax would generate $350 billion annually in the US alone.

Last month, the Senate passed a budget deal that, among other things, cut Social Security disability benefits and increased military spending by $50 billion. The cuts were justified by the urgent need to “avert government default.” These fiscally “necessary” cutbacks on social services, coupled with an expansion of corporate welfare, are examples of “more of the same” politics that communities are tired of, and frankly will not withstand.

The Movement for a “Robin Hood Tax” Heats Up in Chicago

Protesters demonstrate for a Robin Hood Tax in Chicago, Illinois, November 2, 2015. (Photo: Martin Macias)

Advocates of the “Robin Hood Tax” shut down Chicago’s financial sector on Monday, demanding a financial transaction levy they say could generate an estimated $10 – $12 billion in annual revenue for a state currently facing a $5 billion deficit. Forty-one people were arrested after they blocked the entrances to the Chicago Board of Trade building, chanting, “What is America going to be? Corporate greed or democracy?”

Illinois is entering its fifth month without a budget. Gov. Bruce Rauner is refusing to sign any budget passed by Democrats, who hold a super majority, until his pro-business, anti-union “structural reforms” are included. Democrats have called his reforms “non-budget items.” Rauner’s cuts include: $17.6 million for reduced fares for senior citizens and students on public transit; $26 million in social services and public health grants, and funding to pay for the funerals and burials of public-assistance recipients, smoking cessation, teen programs, autism, and HIV and AIDS programs.

Solo LittleJohn, who earns minimum wage as a cook at a Kentucky Fried Chicken restaurant outside Chicago, called Gov. Rauner “racist” for refusing to pass a state budget which has resulted in cuts that impact “working people (of color) the hardest.”

“These are cuts and taxes we can’t afford as working people. They keep taking more from us,” LittleJohn said. “It’s like trying to bleed a rock dry.”

The fight for shifting priorities in Illinois is part of a larger struggle – a push for a different way of approaching state revenue that centers the needs of vulnerable people. Fair Economy Illinois, the group that organized Monday’s action, is calling for a Financial Transaction Tax (FTT), also known as the Robin Hood tax. They are demanding lawmakers explore progressive revenue options like FTT before making cuts to social services like mental health and child care.

A FTT is a small levy on the trading (buying and selling) of financial assets such as stocks, bonds, currencies and derivatives.

The idea is not a brand-new one: The US used to tax financial transactions between 1914 and 1966.

“The tax would generate vital resources that we need in our communities,” said Toby Chow of Fair Economy Illinois. “We could rehire laid-off teachers, fix crumbling streets and public transit, and providing quality infrastructure, health care and social services,” Chow said.

According to the Chicago Political Economy Group, which has pushed for a FTT for years, the tax on a $92,500 contract would be $4 ($2 to buy and $2 to sell), or about 0.004 percent, which would be paid by traders.

If passed, the FTT would still be much lower than the common sales take, which is something everyone pays, regardless of your economic status. In Illinois, the state sales tax is 6.25 percent. Chicago’s sales rate will rise to 10.25 percent on January 1, making it the highest in the nation.

Illinois has two of the largest financial markets in the world, the Chicago Mercantile Exchange (CME) Group and the Chicago Board Options Exchange (CBOE). Each year the value of products traded on these two exchanges totals more than $900 trillion.

In an email, a CME Group spokesperson told Truthout, “Transaction taxes on futures and options would be bad for business, resulting in job losses here and declines in state and local tax revenues.”

Meanwhile, Kristi Sandford, communications director for IIRON, said the state and city are both “taxing working people to death” and that revenue must come from “those who can pay.”

In the past, CME Group has threatened to leave the state if a tax was imposed – but for now, its relationship with Springfield remains tight: “After getting their $77 million annual tax break from Springfield, CME has no incentive to leave,” said Sanford.

Mayor Rahm Emanuel, a former CME board member, has rejected the proposed LaSalle Street Tax (as the FTT has been dubbed in Chicago).

Gov. Bruce Rauner (R-IL), a longtime equity investor who made more than $57 million in personal gains in 2014, offered no direct comment on the proposal.

Importantly, the Chicago City Council can’t authorize the tax; it would have to be done in Springfield, the state’s capitol. Illinois House and Senate bills to establish a financial transaction tax were introduced earlier this year, but neither has yet made it out of committee.

Rep. Barbara Flynn Currie (D-25th District), who chairs the Illinois House Rules Committee, told Truthout she is in support of the bill, but getting it to pass is up to her colleagues, not her.

“I think it makes financial sense,” Currie said. “There’s no reason why we shouldn’t follow cities that have imposed a similar tax, like London.”

Another Economy Is Possible

Enthusiasm for a financial transaction tax extends far beyond Illinois. The national Robin Hood Tax campaign was started in 2011 by National Nurses United, National People’s Action, Health GAP, ACT UP and others who “saw the need to produce revenues from taxing the finance sector, in order to meet human needs,” according to Ken Zinn, political director for National Nurses United.

The groups adopted the name “Robin Hood Tax” from the existing international FTT movement. (When the US campaign used the term “Financial Transaction Tax” people mistakenly thought it meant a tax on ATM transactions.)

In the past four years, more than 200 grassroots organizations have signed on in support. They include groups who work on issues like student debt, home foreclosures, infrastructure, health care and more. The tax has also garnered support from some of the country’s wealthiest individuals, such as Bill Gates, Mark Cuban, George Soros and Warren Buffet.

“It’s gotten organizations out of their silos, working together towards a common goal,” said Zinn.

He says the widespread support stems from the fact that many organizations see the tax as a source of revenue to support funding for their own demands, from health care to child care to helping people avoid home foreclosure.

“We are always told by government, at the local and national level, that there is no money,” Zinn said. “We are able to show there is money. It’s sitting on Wall St. With this tiny tax, we can produce over $350 billion in the US alone.”

The top 1 percent of the US population earned a record one-fifth of the country’s income in 2014, and the 400 richest Americans have more money to spend than the bottom 50 percent.

Advocacy for a Robin Hood tax has played a central role in the fight for economic justice in recent years. In 2011, National Nurses United members organized a mass demonstration at the US Chamber of Commerce. They followed that with an action outside the New York Stock Exchange. More than 1,500 nurses marched through Wall Street, protesting corporate greed and income inequality. Three months later, the Occupy Wall Street movement kicked off.

On the two-year anniversary of Occupy Wall Street’s takeover of Zuccotti Park, unions and activist groups again marched through the city, demanding the Robin Hood Tax. They chanted, “Want to end this deficit? End the war, tax the rich.”

Protesters wore Robin Hood costumes. Some wore tights, and many wore the signature green cap.

Reginald Brown, a member of Vocal-NY, one of several HIV/AIDS activist groups endorsing the Robin Hood tax, told Labor Notes, “We could end AIDS in our lifetime. Instead, Wall Street executives got bonuses after their bailout.”

Prosperity and Equity for All?

In the realm of legislative politics, The Robin Hood Tax campaign has put its support behind the Inclusive Prosperity Act (SB 1371), a bill introduced by Sen. Bernie Sanders (I-VT) in May of 2015. The House version of the bill (HR 1579) was introduced by Rep. Keith Ellison (D-MN) in 2013, but died in Congress.

The “Robin Hood Tax” bill (as Sanders’ bill is called by advocates) is a tiny levy of less than half of 1 percent on financial sector transactions. If the bill were signed into law, the rate that banks would be taxed at would still be a far lower percentage than the common sales taxes Americans pay on everyday goods. Still, revenue would be considerable: It is estimated that the tax could generate as much as $350 billion each year in the US alone.

The text of the bill concludes, “The global financial crisis cost Americans $19 trillion in lost wealth.” It says the proposed tax “could help create sufficient jobs in both the public and private sectors to replace the 8 million jobs lost in the Recession.”

The Inclusive Prosperity Act is the chief funding mechanism for Sen. Sanders’ proposed College For All Act, which, if signed into law, would eliminate tuition at public colleges and universities.

Zinn said the Robin Hood Tax movement has received a huge boost by Sanders speaking about wealth inequality on the campaign trail. National Nurses United officially endorsed Sanders’ presidential campaign this year.

Still, a lack of political will, coupled with the influence of substantial political donations from the finance sector, pose significant challenges to activists.

“Wall Street calls the shots,” Zinn said. “It’s up to us to build a mass movement of people who demand that elected officials support the people’s agenda, not Wall Street’s agenda.”

The effort to pass the Robin Hood Tax in the US is many years behind the international movement, which has made significant progress. The global FTT movement has members in more than 25 countries representing more than 250 million people. The tax has been in place for decades in more than 40 countries around the world including the UK, Brazil and Japan.

FTT has been an important element in the global fight for economic justice. The 2008 global economic meltdown disproportionately affected people who did nothing to cause it. Residents of the world’s 56 poorest countries fell into deeper hardship when their nations experienced a collective $70 billion shortfall. Now, advocates say this tax will generate resources to end poverty and restore services cut by austerity measures.

Zinn recounted an action in 2011, in which international FTT activists descended on the G20 Summit in Cannes, France demanding support for the levy. The movement was so effective that FTT became an item on the agenda put together by then G20 President Sarkozy.

“My Conscience Cannot Be at Rest”

While Mehrdad Azemun, campaign director for National People’s Action, was marching down LaSalle Street, he noticed the demonstrators receiving many thumbs up from people on the side – even from the people stuck in traffic.

“We are the 99%. It resonates for a reason.”

Kristi Sanford wants to make this tax – along with taxing corporations and the rich – a political reality.

“Politicians and pundits are dismissing (the push for FTT), much like they did the Fight for $15 campaign,” she said. “Organizers made the $15 minimum wage politically possible in places like New York and Seattle. FTT can be a reality (in Chicago).”

Linda Thomas, a professor at the Lutheran School of Theology, attended Monday’s action in Chicago with her daughter Dora, a high school freshman. While Thomas herself has not felt the harshest impact of Illinois’ budget standoff, she said protesting cuts to social services is an important act of solidarity.

“I’m impacted when another mother can’t get child care for her children,” said Thomas, referring to cuts to the state-subsidized Child Care Assistance Program. “My conscience cannot be at rest.”