Economy Headlines
| Nancy Pelosi Supports Global Tax on Stock Transactions to Fund Next Stimulus Bill | | Print | |
| Written by Joe Wolverton, II | ||||||||||||||||||||||||||||||||||||||||||||
| Monday, 07 December 2009 15:57 | ||||||||||||||||||||||||||||||||||||||||||||
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According to the text of the bill (H.R. 4191), Congress would be authorized to impose a global tax on “the sale and purchase of financial instruments such as stocks, options, and futures.” The tax, 0.25 percent on every applicable transaction, is described in the black letter of the bill as a “small securities transaction tax” that would generate nearly $150 billion a year. Those funds, according to the Speaker, would be co-mingled with funds diverted from the Troubled Asset Relief Program (TARP) and deposited in a new account that would pay for a second stimulus package similar to the $789 billion project signed into law early this year by President Obama. Another proposal, the one specifically called for in the measure itself, mandates that half of the money generated through the tax be spent on creating the “Job Creation Reserve,” a fund designed to promote the creation of jobs in order to reduce the rate of unemployment. Although not explicitly promulgated in the text of the legislation, undoubtedly the money would also be used to establish a new government agency tasked with overseeing the collection and dispensing of funds deposited into the reserve’s coffers. The other $75 billion would be used to pay down the $1.4 trillion Federal budget deficit. Determined to not let international borders (or the Constitution) inhibit her thrill of imposing new taxes, and worried that someone might actually invest somewhere other than the United States and thus avoid paying the tax, Speaker Pelosi has declared that transactions worldwide should be monitored and taxed, not just those conducted in the United States. “I believe that the transaction tax still has a great deal of merit. The concern that many of us or others have had is that it will send, it will send transactions overseas. The fact is, what we are talking about is a global transaction tax, something that we would do in conjunction with other … nations,” explained Pelosi during her weekly press conference. Pelosi has like-minded partners overseas already willing to march in the global-tax parade. UK Prime Minister Gordon Brown actually introduced a similar proposal at a meeting of G-20 finance ministers in St. Andrews, Scotland, earlier this year. The iteration of the tax as espoused by Brown would require all major financial centers to enact a version of the legislation and empower a revenue collection agency specifically designed to monitor applicable investments and to collect and deposit the funds into the appropriate government’s treasury. According to Brown’s idea, all countries would eventually come under the bailiwick of the tax scheme’s global revenue service so that eventually every transaction would be taxed, no matter where it originated. Undoubtedly Prime Minister Brown will find fast friends in the American legislature. Congress never seems to tire of finding new and insidious ways of taxing the American people. Their favorite gambit is to proclaim that any increase is designed to force the rich to pay their fair share. Trouble is, the definition of rich is changed according to how much money Congress needs to wring from their constituents in order to fund their latest obsession. In the present case, anyone with any investment in a mutual fund, a 401 (k), a pension plan, or other diverse savings vehicle is rich and is the target of Pelosi’s voracious revenue appetite. Wary of reprisals from those who recognize a plan to “soak the rich” is usually nothing more than a way to put another straw on the back of the middle-class camel, the bill announces that the tax is aimed at Wall Street and will have “a negligible impact” on average Americans. To anyone familiar with congressional double-speak, that sort of exemption should send up a bright red flare. First, one must remember that weasel words like “negligible” have a different definition to Congressmen accustomed to bandying around billions of dollars before breakfast (as Senator Dirksen is quoted as saying, “A billion here, a billion there and pretty soon you’re talking about real money”). While the measure does contain a brief list of common transactions that ostensibly will not be taxed, the roster of taxable transactions is impressive and will have an impact on hard-working Americans and those now retired and living off pension investments that is anything but negligible. While the bill’s author purports to only be targeting the large Wall Street brokerage firms, the truth of the matter is that all Americans with any sort of investment will feel the impact of this tax. Every stock transaction, worldwide, will be subject to the tax, even if that transaction is made as a small part of a mutual fund or pension plan. And, as these plans are most often managed by Wall Street heavy hitters or their affiliated firms, then the cost of the tax designed to punish them surely will be passed on by those firms down to every investor, from small business owners to senior citizens living off income derived from retirement funds. No matter who is identified as the intended target of this new global tax being so proudly promoted by American and foreign lawmakers, the simple and unforgiveable fact is that it will significantly reduce the value of the savings accounts of every American, no matter how large or small, at precisely the zenith of a worldwide financial crisis that has hobbled and humbled their money-saving efforts at every turn.
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Comments (11)
Save US Jobs
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Speaker of the House Nancy Pelosi (D-Calif.) is the Will Rogers of big government: She never met a tax she didn’t like. Her latest pet project is the neither nimbly nor accurately named “Let Wall Street Pay for the Restoration of Main Street Act of 2009.” The bill, introduced by Peter DeFazio (D-Ore.), was referred to various House committees Friday and benefits from the cosponsorship of over 25 Congressmen.
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Save US Jobs!!! Help Save small business men and women in the USA. You can find out how many citizens have already spoken out against this burdensome transaction tax. We need to get Americans out of trouble, not further into it. Show your support here: http://www.rallycongress.com/greentradertax-traders-association1/2644/view_all/ |
Last Straw
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... This is a wealth tax on the middle class. We have worked so hard to save. We will be taxed on our savings before we can even invest it. As bait to lure investors into the trap, some in Congress are proposing an insignificant exemption for our accounts. How long will that exemption last? How long will that "tiny" tax of 0.25% last before it rises to 2.0%? Even with the temporary exemption, the hidden cost increases will cost multiples more than the tax itself. All of the modern day financial business competition, trading volume and liquidity have made investing so much cheaper the last 15 years. This tax will put a stop to all of that and expenses will immediately rise to literally remove several percent from our annual yield. Broker fees will increase by many times as most brokers will fail as trading activity will vanish. The bid-ask spread will increase by 50 times. That and other expenses will reduce compounding. Investors will not realize one half of their retirement. |
Doug
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Disaster What no one seems to understand is that this tax would destroy the US financial system. Think about the implications of a "small" .25% tax. Let's say you are talking about a trade that lasts for one week. You will be taxed once when you enter the trade and once when you exit. Therefore, you will pay a .5% tax on this trade. There are 52 weeks in the year, and therefore your annualized tax is actually 52 * .5% = 26%. In other words, this tax will eliminate any trading activity with a holding time of a week or less that fails to generate returns of at least 26% per year. Guess what. That is about 98-99% of all trading activity. People don't understand how financial markets work. This will almost completely eliminate the trading activity of all financial intermediaries. Financial intermediaries facilitate retail trading, institutional trading, stock and debt issuance, corporate financial transactions, etc. When trading volume grinds to a halt, liquidity and efficiency in the market place will disappear. This will destroy the US financial system. I don't understand how people fail to see this. |
John Taylor
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Horrible...... Thowing a Participation Fee on the general public for buying & selling stocks IS NOT a way to get back at Wall Street Investment Banks. Tax those banks directly if you want to exact money from them. Why slam the general public with a transaction tax because of what the investment banks did? |
Eileen Thomlinson
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Are you kidding?!?! T'S NOT A TAX ON PROFITS!!! IT'S A FEDERAL GOVERNMENT PENALTY ON EVERYONE, INCLUDING THE MIDDLE CLASS, WANTING TO INVEST MONEY INTO COMPANIES. TAX PROFITS, NOT THE DESIRE TO INVEST MONEY INTO COMPANIES SO THEY CAN HIRE MORE PEOPLE!!! |
Steven Faber
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This is sickening. "Let Wall Street Pay for the Restoration of Main Street Act of 2009"???? I'm a middle income main street guy. The furthest from a Wall Street guy that you can think imagine. I wear jeans with usually mud all over them & don't shave regularly. I have a blue collar job. I would have to pay this tax as would every other middle income person who would want to buy or sell a stock. If they want Wall Street to pay for Main Street, then why not tax the big Wall Street Investment Banks directly. Taxing the middle class like this is WRONG! Obama promised us no middle class tax increases. What the heck is this?!?!?!?! ...and I'm a Democrat!!! |
Juma
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... Great, if this gets pushed through, businesses will just take their business overseas or be forced to shut down completely and we’ll lose all of the benefits provided by their services and tax dollars. This tax proposal doesn’t even consider the repercussions associated with such a tax. Those pushing for this tax aren't considering the jobs that will be lost due to this tax and the trickle down effect associated with all of the job losses proponents of this bill are supposedly trying to help. You want to make life even worse for that average American just push this tax on through. Why not consider a bank levy as suggested by Secretary Geithner and the IMF instead? I'm sure there's other ways to accomplish their goal versus hitting everyone (particularly Main Street) with such an all encompassing tax. |
Ryan
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... Communist attack on the free market. Some other market will take over. Detroit is gone and so will NY. China wants silicon valley, give that to them, while we are at it. All we will be left with is our media..... great. |
Pablo
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WE NEED TO TAKE OUR COUNTRY BACK ! This tax is an assault on every middle class American. It is nauseating! This is an example of what happens when we have the full power of our government shifted on one side. This government is raping every American, whether it's taxes for cap and trade, taxes for healthcare, or taxes for more failed stimulus. Please write/call your reps and please lets make sure we make Washington shift the balance of power in 2010! |
J. Williams
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Mr A new tax on Americans, that will drive financial businesses to welcoming foreign countries, at the same time putting millions of main street workers out of jobs? Wow! That's political insanity. That would be as dumb as the debacle that caused the temporary GFC. Right after American politicians presided over sub-prime lending, a couple of under-informed, under-qualified politicians would like, despite express opposition of far greater minds, to inflict a "hate tax". Sorry, my country won't be interested. Revenge taxes are bad news. If the US wants to collect more money, they should collect it from the bank managers who threw money at sub-prime lenders who dished it out to stoopid borrowers who should have known better. Foreign countries will always choose to maintain their financial autonomy. They won't like American politicians telling them what to do. |
Flu-Bird
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World tax demacrats So it looks like the demacrats are not satisfied with taxing us here in the US of A now they want to tax the world to finance their next stymulus pacage deals and the sinister UN is behind it all |
