New possible tax on Stock Trades

[Magox]

These guys just don't understand economics.

 

Democrats Weigh Tax On Financial Transactions

 

Taxing financial transactions on Wall Street is gathering support in high places.

 

With federal budget deficits soaring, policy makers and other advocates are eyeing the huge sums that could be raised as a way to cover the costs of new initiatives.

 

Labor unions, in particular the AFL-CIO, have proposed a financial-transactions tax as a way to defray costs of a health-care overhaul. Lawmakers have discussed a similar fee as a way to cover the cost of future financial oversight. Liberal advocates are pushing the tax to pay for new stimulus spending.

 

Taxing Wall Street's financial transactions is back on the table. WSJ's John McKinnon says the populist notion is gaining support on Capitol Hill and with the IMF.

 

This week, the left-leaning Economic Policy Institute floated the idea of a national transaction tax that would raise $100 billion to $150 billion a year. The tax, at a rate of 0.1% to 0.25% of the value of the trade, would be levied on all financial transactions such as stock trades, but not on consumer transactions such as with credit cards.

 

The money would be used initially to pay for temporary aid to states, hiring incentives for public- and private-sector employers and school construction money.

 

"We are in a difficult time right now, so people are looking at every opportunity to gain some revenue to fund" new initiatives, said Rep. Stephen Lynch (D., Mass.), a member of the House Financial Services Committee. "Because I was one of the first to suggest using this to fund [new] regulatory infrastructure, folks have come to me and said, 'That's a good idea; I've got a better one: Why don't we use it for stimulus or especially health care?'"

 

One Democratic aide said the idea is under consideration among House leadership, though the discussions are preliminary.

 

A spokeswoman for Republican House leader John Boehner of Ohio criticized the idea. "How is killing more American jobs by stifling capital investment, further eroding families' savings and diverting much-needed investment out of the United States a good idea during a severe economic downturn?" said the spokeswoman, Antonia Ferrier.

 

Unnoticed by many, the concept already has found its way into federal law. At the urging of House Democratic leaders, last year's $700 billion financial-bailout bill contains a provision requiring the president to submit legislation to "recoup" from the financial-services industry any eventual shortfall in the Troubled Asset Relief Program, or TARP.

 

The provision, inserted during last-minute negotiations, was encouraged by moderate Democrats who worried that taxpayers would be left footing the bill if the government investment produced big losses.

 

Transactions taxes first were proposed in the 1970s for currency trading, to reduce volatility in exchange rates. The idea later was seized on as a way to reduce volatility in financial systems.

 

In an interview Friday, Rep. Barney Frank, chairman of the House Financial Services Committee, said he supported the legislation's idea of recouping future losses from the industry.

 

"I was one of the ones who suggested" the idea for the TARP provision, said the Massachusetts Democrat. He said he didn't specifically propose a financial-transactions tax. The provision could be structured as either a tax or a fee, he said, and could be a one-time provision rather than a permanent tax.

 

That would make it less likely that parties to financial transactions would seek to escape the tax by moving activity to another country. He said imposing such a tax "country by country...would be a problem."

 

Many economists have argued against a financial-transactions tax on policy grounds, saying it could have consequences for markets, in part by driving activity outside the U.S. Critics said it also would throw sand in the gears of capital markets.

 

Still, some appear to be changing their minds. "I'm not as hostile as I used to be," said Len Burman, a Syracuse University professor and former head of the Tax Policy Center, a venture of the left-of-center Brookings Institution and Urban Institute. Curbing frequent trading might be a good idea, he said, though he is "skeptical this is the best way to do it."

 

Mr. Frank said additional fees might be imposed on financial-industry participants such as payday lenders in order to pay for a consumer-protection agency.

 

Fees to pay for regulatory activities aren't considered a tax under House rules. The new fees would be relatively minor, he said, adding that details haven't been worked out. Similar fees already help pay for the operations of some agencies such as the Securities and Exchange Commission.

 

A broader question is whether levies on the financial industry might be used to help establish a rescue fund for future calamities.

 

In response to a question at a House hearing in September, White House economic adviser and former Federal Reserve Chairman Paul Volcker said it "might be interesting" if Congress ordered a study of the idea of a transactions tax. But he pointed to the problem of driving transactions to other countries. "That's the No. 1 problem; you'll have to get some consistency internationally," he said.

 

Trade unions are backing the idea to reduce government deficits and pay for new jobs initiatives, among other purposes. Amid their urging, the Group of 20 industrial and developing nations recently pushed the International Monetary Fund to study the idea, which has drawn endorsements from some leaders in the U.K. and Germany.

 

 

Great Idea, Lets tax people more on their stock trades. I guess that makes American Capital markets more attractive? Every day that passes we are losing market share to the Emerging markets, so now lets tax whoever wants to invest in American stocks more than what they are already getting taxed!

 

BRILLIANT!!!!

[Alaska Darin]

We're going to tax our way to prosperity, just like every third world country ever.

[John Adams]

We're going to tax our way to prosperity, just like every third world country ever.

 

I always felt like Atlas Shrugged comparisons, like Hitler analogies, are overdone. I am starting to feel differently.

 

Dear Hollywood: Please make the upcoming movie good.

[Chef Jim]

Taxing Wall Street for transactions? Ummm, WS doesn't make transactions, people do. So this would be a tax on everyone who owns stocks or mutual funds. They want to charge up to 25 bps for transactions while also challenging mutual fund 12b-1 fees which typically run..........you guessed it 25bps. What a bunch of morons.

[KD in CA]

Taxing Wall Street for transactions? Ummm, WS doesn't make transactions, people do. So this would be a tax on everyone who owns stocks or mutual funds. They want to charge up to 25 bps for transactions while also challenging mutual fund 12b-1 fees which typically run..........you guessed it 25bps. What a bunch of morons.

 

It's not really a tax if people don't notice the difference in their quarterly statement.

[Magox]

This country needs more capital, and the fact that they are considering taxing the Stock market further is just plain stupid. Of course they will consider it though, they have to pay for this trainwreck of a Health Bill that they are wanting to pass and guess who's pushing for it? The AFL-CIO

 

Don't they understand that our markets are becoming less competitive everyday that passes? That we don't have the growth rates to compete with emerging markets, and that we should be trying to incentivize foreign capital to invest in American companies? Of course they don't, because they lack foresight and they have shown that over and over.

 

Not only will it deter foreign capital to invest here in the U.S, but more domestic funds will leave to other countries as well. Of course they should, what's not to like about explosive growth rates and a much friendlier tax rate?

 

If companies don't have as much money being invested into them, will that impact future technologies or jobs? Of course it will, money makes the world go round, but of course, this dumbass congress and administration would rather tax the Capital markets to pay for their precious entitlement programs that won't "add to the deficit" Ya right!!

[Chef Jim]

It's not really a tax if people don't notice the difference in their quarterly statement.

 

And of course you're right they won't notice, especially of they own mutual funds which are very lacking in their transparency on fees.

[IDBillzFan]

Great Idea, Lets tax people more on their stock trades. I guess that makes American Capital markets more attractive? Every day that passes we are losing market share to the Emerging markets, so now lets tax whoever wants to invest in American stocks more than what they are already getting taxed!

 

BRILLIANT!!!!

As I've mentioned many times before, this administration's entire mantra is "Only the government can (fill in the blank)." They need to fund the entitlement programs so the Peggys of the world continue to vote them into office. Unfortunately, that means finding money in every nook and cranny possible, and that means creative new ways to tax Americans and small businesses. They've committed to these entitltements without completely thinking through how to fund them, but it is somehow easier for them to keep finding new fundraisers than it is to admit they have bitten off more than they can chew.

 

This WH is acting like not a single one of them has ever run a business.

 

Oh, wait...

[Alaska Darin]

This WH is acting like not a single one of them has ever run a business.

 

Oh, wait...

Community organizing is hard...

[KD in CA]

This WH is acting like not a single one of them has ever run a business.

 

Oh, wait...

 

I could live with that. What's frightening is the WH acting like they don't care if anyone runs a business.

 

There appears to be a blinder mentality that 'the economy will rebound' as if it's simply a law of nature so it doesn't matter how much more burden they dump onto businesses or onto individual taxpayers who are the source of new enterprise and hence, new jobs.

 

Watch the near-poverty rate climb in this country as we deal with the fall out from this disaster over the next few decades.

[IDBillzFan]

I could live with that. What's frightening is the WH acting like they don't care if anyone runs a business.

 

There appears to be a blinder mentality that 'the economy will rebound' as if it's simply a law of nature so it doesn't matter how much more burden they dump onto it or onto individual taxpayers who are the source of new enterprise and hence, new jobs.

 

Watch the near-poverty rate climb in this country as we deal with the fall out from this disaster over the next few decades.

When everyone lives in poverty, no one lives in poverty.

 

More genius.

[Pine Barrens Mafia]

When everyone lives in poverty, no one lives in poverty.

 

More genius.

 

 

Ha! Excellent work, Mock.

[IDBillzFan]

Ha! Excellent work, Mock.

Here's a great comment posted under that article while, while irrelevant, is pretty funny:

 

Interesting commentary. This article is actually quite enlightening and provides insight into the current leadership.

 

Clunker: $4,500

Human Being: $3,000

Knowing that our elected officials have no interest in serving the people: Priceless

[Kevbeau]

"The provision could be structured as either a tax or a fee, he said, and could be a one-time provision rather than a permanent tax."

 

Oh, my bad. It's not a tax, it's a fee. Well carry on then.

 

What a douche.

[Chef Jim]

"The provision could be structured as either a tax or a fee, he said, and could be a one-time provision rather than a permanent tax."

 

Oh, my bad. It's not a tax, it's a fee. Well carry on then.

 

What a douche.

 

They've been doing that for a while here in CA, calling them fees.