Economist hails plan as “a move towards establishing a 21st century structure for financial markets.”
By Lauren McCauley | Common Dreams
Taking a cue from the progressive playbook in what observers are interpreting as a more populist tack, mainstream Democrats on Monday unveiled a new economic “action plan” to redistribute wealth from top earners to lower and middle classes.
Among the components included in the proposal, introduced by Rep. Chris Van Hollen (D-Maryland) with backing from House Minority Leader Nancy Pelosi of California, is a Financial Transaction Tax, also known as a Robin Hood Tax, which for years has been a staple of progressive budgetary plans.
The tax places a 0.1 percent fee on financial transactions that, under the action plan, will be rolled in with new reductions in tax breaks for the top 1 percent of earners and placed in the pockets of low and middle-income households.
The new taxes will reportedly add up to roughly $1.2 trillion over the next decade, which would in turn fund a ‘paycheck bonus credit’ of $2,000 a year for couples earning less than $200,000.
Other elements of Van Hollen’s proposal include incentivizing companies to raise worker pay by placing restrictions on the tax treatment of executive salaries for companies that don’t also increase employees’ income, incentivizing worker training programs, nearly tripling the tax credit for child care and rewarding people who save at least $500 a year.
“This is a plan to help tackle the challenge of our times,” Van Hollen, a ranking member of the House Budget Committee, said during a speech given at the Center for American Progress ahead of the official roll-out. “We want a growing economy that works for all Americans, not just the wealthy few.”
Following the announcement, economist Dean Baker hailed the plan as “a move towards establishing a 21st century structure for financial markets.”
Baker continued: “In the last four decades there has been an enormous reduction in the cost of financial transactions due to the development of computers and information technology. This has led to an explosion in trading volume. Much of this trading volume serves no purpose from the standpoint of the productive economy, yet it generates enormous incomes for the financial industry.”
Though Baker commended Van Hollen and the Democratic leadership for showing the “courage to raise the issue,” others noted that the 0.1 percent tax is a modest proposal compared with other iterations of the so-called Robin Hood Tax.
Nation contributor John Nichols wrote on Monday: “They are taking a tentative step, and that is good. But real progress—in debates with Republicans and in the broader effort to change politics and policies—will only be made if top Democrats come to understand that, in order to address income inequality, America should develop a robust Robin Hood Tax.”
Though observers note that the plan is not likely to make any traction in the new GOP-led Congress, many say that it is an indication that progressive views are now being more openly considered by centrist Democrats.
The Hill reports that the new plan “suggest[s] that Democrats want to offer a sharper contrast on income inequality and paycheck issues to voters now that Republicans do run both sides of the Capitol.”
Along a similar line, Rob Garver at The Fiscal Times writes:
With no chance of passage, the proposals are meant not to become law—but to tell voters where the party stands. Democrats, the evidence suggests, have decided that the economic populist route, as popularized by Massachusetts Sen. Elizabeth Warren, might be the one that takes them back to partial control of Congress in 2016.
This article originally appeared on Common Dreams.