The Oregon Biz Report - Business News from Oregon

Read about accutane journal moderate acne here

The Bank Tax – History Repeating Itself?

January 16, 2010

By Tom Quaadman
US Chamber of Commerce
Join US Chamber

Following his State of American Business address, Tom Donohue mentioned at a press conference that protectionist policies and tax increases transformed a severe recession into the Great Depression. Is history repeating itself?

Well, we have a severe recession. The failure to enact trade agreements, like the one with South Korea, I will leave for other to opine on. However, the administration is poised to propose one new tax on banks, while others in Congress are pushing a tax on stock transactions. The reasons for these tax increases are to raise revenue, curb risky bank practices and stop excessive trading of stocks.

These taxes are most troubling because they will hurt the ability of business to access capital. If we think of the economy as our circulatory system, capital liquidity is like the blood that courses through our veins and arteries. The financial crisis that erupted in full with the collapse of Lehman Brothers was like a cardiac arrest. Liquidity evaporated, the real economy began to contract at an alarming rate and unemployment skyrocketed. TARP stabilized the system and the economy has slowly started coming back to life. But we are not out of the woods.

The potential tax on banks will make it less likely for banks to make the loans that businesses need to expand and create jobs. In fact, the tax may be linked to the liabilities a bank holds. The more loans a bank writes, the more liabilities held the more taxes to pay. Yesterday, the Chamber sent the administration a letter asking to reconsider a bank tax.

The proposed tax on stock transactions will increase the costs for individual investors and make it harder for businesses to raise money, or for a small business to become a large business. Capital will simply leave our shores and our economy will suffer as a result.

Ironically, in 1932 President Hoover had Congress pass a dramatic increase to the then existing stock transaction tax to stop what he thought was needless speculation. The result- 60 days after the increase was enacted the stock market hit its low for the Great Depression and two years later the Treasury Department issued a study stating that the tax failed to end speculation or raise much revenue. Over 30 years later, the tax was repealed as a part of the Tax Reforms first proposed by President Kennedy.

200 years ago it was a common practice for a doctor to bleed a patient and very often the cure would kill. These proposals may be well intentioned, but the ramifications could be deadly.

  
Print This Post Print This Post    Email This Post Email This Post

Discuss this article

jmb27 January 16, 2010

Predatory Lending is a major contributor to the economic turmoil we are currently experiencing.

Here is an example of what I am talking about:
Scott Veerkamp / Predatory Lending (Franklin Township School Board Member.)

Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices:
“Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called Yield Spread Premiums, turned home mortgages into a SCAM.”

The Center for Responsible Lending says YSP “steals equity from struggling families.”
1. Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. 2. This is an average of $5,000 per loan. 3. The median value of the properties was $135,000. 4. Clearly, this type of lending represents a major ripoff for consumers.

http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-83C5-31925F046B6F

Jack Pearson January 16, 2010

PLEASE TELL REP DEFAZIO HOW STUPID THE TRANSACTION TAX IDEA IS!!! IT’S A MAIN STREET TAX, NOT A WALL STREET TAX!!! MUTUAL FUNDS THAT PEOPLE BUY FOR RETIREMENT FUNDS WILL HAVE TO PAY A TRANSACTION TAX ON EVERY SINGLE STOCK TRADE DONE WITHIN THE FUNDS. OUR RETIREMENT ACCOUNTS WILL HAVE TO PAY FOR THAT!!! PLEEEEEEEEEEASE DON’T PUT THIS STUPID MAIN STREET TAX ON ALL OF US!!! WE DON’T DESERVE IT!!!

Carl January 17, 2010

Stock transaction tax: Middle class wealth destruction is underway. Bail out the debtors and lenders and make the savers and investors pay for it. The exchange traded stocks, commodities, derivatives, traders, exchanges and my retirement fund had nothing to do with the banking crisis. We already pay capital gains if we make money. Now we would have to pay tax even if we lose money. Estimates from impartial studies such as from The Independent Budget Office of New York City estimate that such a tax would result in net negative revenue after subtracting losses from lower capital gains and income tax loss from hundreds of thousands of jobs lost. A transaction tax would result in annual yield loss of more than 2% for long term investors according to the mutual fund industry, that’s if they don’t increase the tax. Imagine if the tax was 2%. Investors starting out can expect to lose one half of their retirement because of reduced compounding. Any proposed long-term investment tax exemption means nothing. Fund managers will pass the tax cost onto us. As most trading activity will be stopped, it will severely reduce liquidity that makes it so cheap to purchase stock today. This tax would increase the bid-ask spread and broker fee costs multiples more than the tax itself. Sweden and Germany got rid of their transaction tax after only a few years of disaster.

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Articles

Press Releases



Top Business News

 

Top Women's News

 

Top Natural Resource News

 

Top Faith News

 

Copyright © 2016, OregonReport. All Rights Reserved. | Terms of Use - Copyright - Legal Policy | Contact Oregon Report

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Business Report through daily email updates:

Delivered by FeedBurner

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

RSS Twitter Facebook

No Thanks (close this box)