Use a transactions tax to pay for health care?

Why not?

A reader asks:

Why has nobody proposed paying for health care expansion through a securities transaction tax? Most of the proposals estimate the cost to be between $100-150B, Dean Baker says that a securities transaction tax could raise about that amount, year in and year out, without being too large or distorting for Wall Street.

But of course, nobody, save for perhaps Baker himself, is proposing this as a reason to pay for expansion. Why is that? Is it because it’s a tax without a strong chance of staying put, and thus people don’t want to devote a shaky (in the sense of being politically questionable) revenue source to something so important? Is it that there’s really more to the economics than some people have suggested? I find that hard to believe, since Larry Summer was seemingly open to the idea in the late 1980s/early 1990s.

To me, this seems like a no brainer. We have a good, seemingly economically sound way to pay for expansion, with the added benefit of possibly using populist anger at Wall Street as a way to make it easy to pass it through Congress. There has to be some reason why nobody proposing this, other than the possibility that the Democrats are in the pockets of Wall Street just as much as the critics in and out of the part say they are.

Good question. Does anyone have an answer to suggest?

I have a related suggestion: if Waxman-Markey dies or gets hopelessly watered down in the Senate, stick a greenhouse-gas tax on the health bill in conference.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com