Income taxes were a paper-era hack. In order to tax economic activity more fairly at the beginning of the 20th century, an excise tax would have had to apply to the trades on Wall Street as well as wholesale activity throughout the economy. Apart from the never-ending wailing by the powerful about taxation, it would have failed because it simply wasn’t possible to track and do the accounting for large numbers of transactions in the pre-electronic era.

So instead the progressive income tax was introduced, taxing the people who have more economic activity using the crude sorting rule of income. It isn’t perfect (or maybe even good) but it was easier in the paperwork era to make one or two hundred million people responsible to file dossiers on themselves every year than it was to track tiny payments of excise tax on billions or trillions of transactions. But we aren’t in the paperwork era any more and the first step in taxing economic activity more directly and more fairly is to tax financial transactions.

But the first task, of course, is to overcome the mountain of FUD and defensive bullshit spewing from elites about how such taxation is unworkable. Fortunately, mainstream economists are on the task:

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/edward-snowden-and-financial-speculation-taxes