AG's Scratchin' Post

[Alex G]

U.S., Again, Says It Won’t Join EU on Financial Transactions Tax

http://blogs.wsj.com/economics/2011/11/03/u-s-again-says-it-wont-join-eu-on-financial-transactions-tax/
By Sudeep Reddy

The leaders of Germany and France raised the idea of a financial transactions tax in their meetings with President Barack Obama Thursday at the G-20 summit. And both got the same disappointing answer.

European Union leaders are using the G-20 forum to push for a tax on trades of stocks, bonds and derivatives to raise money for taxpayers who have bailed out their financial systems. The U.S. is against the proposal, and even some European nations — such as the U.K. and Sweden — say it won’t work unless it’s adopted globally because activity would move to regions that don’t assess the tax.

“The president made clear that he shares the objectives that Chancellor Merkel and President Sarkozy have in ensuring that the financial sector contributes an appropriate share to the resolution of crises,” Mike Froman, the White House’s deputy national security adviser for international economic affairs, told reporters Thursday. The Obama administration has backed a different kind of tax, a financial crisis responsibility fee, on the largest financial institutions.

How did they resolve the disagreement? “I think there is broad consensus between the Europeans that the president met with this morning and ourselves about the ability of each to pursue this in their own way, whatever way they see to be most effective,” Froman said.

Translation: Go for it, but the U.S. won’t join you.

The issue won’t be going away. The G-20's leaders in France invited Bill Gates, the Microsoft founder, to the summit to offer his proposals on development finance. Gates is set to effectively endorse a financial transactions tax as one way to raise money for development causes. That should keep the discussion alive at least through the G-20 meetings.