Published November 10, 2010 - | FoxNews.com
President Barack Obama walks past South Korean honor guard members as he arrives to attend the G-20 Summit in Seoul, South Korea, Wednesday, Nov. 10, 2010. (AP)
As President Obama huddles with world leaders for the G-20 summit in South Korea to weigh proposals aimed at stabilizing the global economy, one idea being pushed is a so-called "Robin Hood tax," aimed at collecting money from rich nations to give to the poor.
The Robin Hood tax -- a global financial transaction fee that could raise hundreds of billions of dollars to pay the cost of the global financial crisis and support developing nations struggling to recover -- is not popular.
While Britain, France and Germany have championed a bank tax for all G-20 nations, financechiefs from the industrialized nations shot down the idea at a previous summit held in Toronto last summer.
Still, the tax's supporters, which include unions, environmental groups, Comic Relief, UNICEF and others in a multinational coalition, say the tax could go to canceling debt from poor nations. Or it could be used for social programs to fight hunger, diseases such as HIV/AIDS and malaria or other causes, programs to which the United States and other nations already donate billions.
The crusaders -- a coalition of 183 organizations from 42 countries -- issued a plea this week urging leaders at the G-20 summit in South Korea to adopt the measure. While specifics have not been outlined, the idea would be to charge a small transaction fee, anywhere from 0.05 percent to 1 percent, on each stock transaction made.
In a letter to G-20 leaders, including Obama, the coalition wrote that the tax would help meet the costs "of the global financial and economic crisis, including reducing the unacceptably high rate of job loss, and achieve key development, health, education and climate change objectives in developing countries."
But critics say the proposal would kill businesses and job growth in the U.S. They note that Obama doesn't even have the authority to tax U.S. businesses to pay for a global fund.
"We support the goal of helping distressed nations, but feel that the tax would harm the economic recovery of the other countries," said Scott Talbott, a lobbyist with the Financial Services Roundtable, which advocates for large financial firms.
"The proposal misses the mark and will do more harm than good. It will raise the price of financial products for the average investor, retirees, pension plans and parents saving for college tuition."
David C. John, a senior research fellow in retirement security and financial markets at The Heritage Foundation, said the proposal is a proven failure.
"Decades ago, responsible economists showed that the so-called 'Robin Hood' tax on financial institutions has no purpose other than to punish banks and provide money for certain pet projects," he said in an e-mail to FoxNews.com. "Given that several governments have already rejected the tax, governments that do impose it will find that thousands of jobs leave their shores for more competitive countries with better fiscal policies."
Last summer when the Robin Hood tax issue arose before the G-20 summit, the U.S. Chamber of Commerce wrote to Treasury Secretary Tim Geithner saying that the financial transaction tax "would raise trading costs and reduce the liquidity that benefits all investors and businesses while a bank tax could reduce the lending capacity of financial institutions, harming the ability of businesses to grow."
R. Bruce Josten, executive vice president of government affairs for the chamber, warned that severe adverse impacts could hamper the U.S.' ability to recover from recession or create jobs. A spokesman for the chamber told FoxNews.com that the business lobby stands by that position.
That hasn't stopped the idea of a transaction tax from gaining attention at home as a potential moneymaking source. Last December, Rep. Peter DeFazio, D-Ore., introduced a bill to impose a tax on financial transactions aimed at letting taxpayers off the hook for future bailouts. The bill never made it out of committee.
In a letter to G-20 leaders, Obama didn't explicitly address the debate on the Robin Hood tax.
But he encouraged the world leaders to pursue policies that will help poorer nations.
"Finally, we should advance our cooperation to address common global challenges," he wrote.
"The Korean presidency has highlighted the key role growth has played in lifting so many out of poverty, especially in emerging Asia, and drawn attention to what we all can do to increase the potential for inclusive growth in low-income countries."
And Geithner wrote an opinion article published Wednesday in the Asian version of The WallStreet Journal that also hinted at consideration of the financial transaction tax.
"We need to strike a balance on the pattern of growth across countries," he wrote. "Balance matters not for its own sake, but because it is critical to strong and sustained growth globally and to future financial stability. Ultimately, we are trying to lift global growth, not just shift it -- so as to deliver strong, sustainable and balanced growth."
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