Obama unveils bank tax to recover ‘every single dime' for Americans

I can't believe I actually going to agree with a new tax, but I think this one actually makes sense.


Here's why.
According to Reuters

From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent.


I would argue that in a productive and free market, the total profits of financial institutions should be only a fraction of this. In fact, I think it's actually hurts the overall economy when main street is funneling so much money to wall street.

The function of the financial sector should be to more efficiently transfer funds from savers to borrowers who will either invest this money or consume it. Of course, banks should prefer borrowers who will invest this money rather than consume, because when you consume good does not earn anything.

Now for some reason, banks confused houses with actual investments. Houses are not investments in general because they do not bring in income. Yes, a house is an asset, but absence a increase in population, credit, inflation, tastes and preferences, etc, the value of a house will go down (go bid on a house in Detroit).

Also, add to this the "subsidies" that the banks are getting from the government though FDIC insurance, Fannie and Freddie, and their relationships with the Central Banks, I think (and hope) this tax will actually reduce demand for financial services and allow savings to actually go more productive means.

Yes, financial services are required for a healthy free market, but we don't have a free market, therefore, I believe reducing the "rents" that the financial industry gets from the rest of the economy will actually be a good thing.