January 22, 2010
January 22, 2010
DeFazio Introduces Transaction Tax
By Oregon Small Business Association,
Oregon Representative Peter DeFazio and others in Congress are pushing a new concept that would fund spending programs by taxing securities and derivative transactions. Supporters argue that H.R. 4191, Let Wall Street Pay for the Restoration of Main Street Act of 2009, which would implement a 0.25% transactions tax, will raise revenue without impacting the average investor. The concept is that the tax is needed to ensure that Wall Street pays for their share of the needed investments. Opposition states that the bill has many underlying problems and loopholes which would lead to an even worse economic decline.
Below are the pros and cons of the transaction tax
• Increase revenue to fund spending programs. Tax would raise as much as $150 billion per year.
• The tax has a negligible impact on the average investor.
• The tax will ensure Wall Street pay for needed investment.
• The tax as a means to eliminate high-volume short-term speculative trading.
• The tax would likely put high frequency traders out of business.
• A transactions tax would reduce the inexperienced trading and would also reduce the trading of those whose trades are necessary to make prices reflect economic reality.
• There are enough loopholes that the tax will raise little money.
• The tax will drive down job and tax revenues overseas while inflating the balance sheets of banks.
• The tax will massively raise the costs of trading.
• The transaction tax is a tax on investors, not bankers.
• Main Street will see lower pension fund values, both in their own retirement savings and in the public employee pension plans they will now have to top off with new taxes on their homes and incomes.
• There aren’t enough exemptions and investors react by sharply reducing trading activity, so there is little revenue, but great harm to the market and the economy.