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Clinton and Europe on Wall Street Tax

As 10 EU nations move closer to a financial transaction tax, a Wikileak reveals the Democratic candidate may be more supportive than previously known. 

Blogging Our Great Divide
October 13, 2016

by Sarah Anderson

Over the past week, we’ve seen two breakthroughs on the issue of taxing Wall Street speculation – one in the United States and one in Europe.

In the United States, one of the hacked emails posted on Wikileaks contains a juicy note from Gene Sperling suggesting Hillary Clinton is more supportive of this idea than previously known.

Sperling, a former National Economic Advisor to Presidents Bill Clinton and Barack Obama, wrote in February 2016 that he favored “a broad, thin financial transaction tax” (i.e., one covering a wide range of financial instruments, with a low tax rate applied to each trade).

To blunt Wall Street’s line that such a tax would hurt the stock market and pension values, Sperling proposed that revenue go towards middle class retirement savings or Social Security. This would be a major “Wall Street pays for Main Street” proposal and Clinton “seemed open” to it, Sperling wrote.

So why didn’t the presidential candidate tout this proposal during the primaries? Prior to Sperling’s email, she had proposed only a very limited tax on “excessive” cancellations of stock trades. Otherwise, Clinton remained silent on the issue throughout the spring.

Sperling’s email offers a clue. While noting that taking a supportive position “would clearly help in the primary,” he was also sensitive to another aide’s concern that in doing so, “we may look like we are just copying Bernie.” Sanders had been plugging a bold tax on speculation to pay for higher education.

The news that Sperling, as mainstreamy a Democrat as you could find, is not only supportive of a financial transaction tax, but actively (and apparently successfully) urging Clinton to support it, is encouraging. And it lends extra weight to the favorable language on this issue that progressives were able to insert in the Democratic Party Platform.

Meanwhile, across the Atlantic, governments from 10 EU countries that have committed to implementing the world’s first regional coordinated tax on financial transactions have met a key deadline.

On October 10, finance ministers from the participating countries (Belgium, Germany, Greece, Spain, France, Italy, Austria, Portugal, Slovenia, and Slovakia) announced they’d reached agreement on the “core engine” of their tax.

While a few design issues are still outstanding, Peter Wahl, a close observer of the negotiations from his perch at the German research group WEED, said that “at this point, only a very major catastrophe could prevent the proposed tax from becoming a reality.”

Leading up to this meeting, the main obstacle was a conservative Belgian finance minister’s resistance to taxing derivatives trades. Reducing the scope of the tax to only stock transactions would’ve cut projected revenues by about 80 percent.

Under stiff public pressure, the Belgian government backed down and agreed to a plan to cover all derivatives, with the exception of those based on sovereign debt. And even this exception is expected to be phased out after an initial a transition period.

According to Wahl, another very positive element of the “core engine” is that it incorporates two important anti-avoidance mechanisms —one based on residence (a transaction will be taxable if at least one of the parties resides in a participating EU member state) and another based on issuance (a transaction will be taxable if the instrument is issued in one of those countries).

As for the outstanding issues, the big one is tax rates. Negotiators had not planned to tackle these in the core engine agreement, but will need to make decisions soon. Pushing for rates that are high enough to generate substantial revenue and discourage short-term speculation will be a focal point of civil society pressure in the coming months.

The finance ministers also left questions about the inclusion of pension funds unresolved. Belgium, one of only a handful of EU nations without a purely public pension system, wants to exclude them. There may also be a push to exempt hedging by “real economy” companies, such as airline purchases of oil futures contracts as a shield from price volatility.

David Hillman, of the London-based Stamp Out Poverty and a leading player in the European campaign for a financial transaction tax, pointed out another major win coming out of the October 10 meeting: finance ministers committed to producing legislative text for the tax by December 6. “This gives a sharp, tight deadline for the remaining work to be completed,” Hillman said.

After the October 10 meeting, German finance minister Wolfgang Schäuble announced his intention to put the financial transaction tax on the agenda of the next G20 summit, which Germany will be hosting in July 2017 in Hamburg.

This means the next American president — whoever that may be — will be put on the spot on this issue on the global stage within the first six months of their term. Hopefully by that time the EU tax will be in the process of being ratified by national governments. And who knows, perhaps leaders of some of the other 19 major economic powers will also be on board.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and is a co-editor of

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