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  • Stock Transaction Tax: Yet another Tax Increase

    Congress is discussing yet another tax increase. This one would be a tax on stock transactions and could fund a new jobs bill since it has become apparent to everyone that the stimulus failed to create any jobs on net. This was underscored again when the Labor Department reported Friday another 11,000 job loss for November.

    The job-destroying stock transactions tax gained traction this week when House Speaker Nancy Pelosi said she “believe(s) the transaction tax still has a great deal of merit.” Improving business confidence is the great missing ingredient holding back a strong economic recovery. Serially threatening the economy with new taxes and new regulations is no way to improve the confidence of America’s families and businesses of a prosperous future.

    The push for the tax began a few weeks ago when the AFL-CIO, in concert with some Congressional leaders, began a new campaign for yet another tax hike to fund Washington’s ongoing explosion of spending. This latest collaboration between Big Labor and Big Government would be a 0.25 percent tax on all stock trades. Given the budding deficit pressures another tax hike proposal is hardly surprising, but, curiously enough, this new tax would target the pensions of the AFL-CIO’s own members.

    Congressional leaders have decided to divide their attention for the rest of the year between a hostile (to patients) takeover of the health care system and feigning concern over rising unemployment. Their new focus on reversing job losses is a tacit admission that the stimulus plan passed in February has failed and that high unemployment rates are likely to persist well into 2011 and beyond.

    But any potential job creation bills will likely cost billions of dollars. And Congressional leaders recognize the public is tired of over-spending and growing deficits. To pacify these concerns they plan to pay for their latest dubious effort to spur job creation with the new financial transactions tax.

    Supporters of higher taxes and larger government have often suggested taxes on financial transactions in various forms as a way to pay for any number of government spending programs, and as a cure for persistent deficits. Just recently, United Kingdom Prime Minister Gordon Brown proposed such a tax on a global scale. The idea, immediately shot down at home, was quickly deflated internationally when U.S. Treasury Timothy Geithner rightly and quickly gave it two thumbs down.

    Taxes on financial transactions if levied globally would diminish the efficiency of financial markets, destroying jobs on a global scale. If such taxes were enacted in the United States, it would sound the death knell for much of the domestic financial industry. Given their penchant for proposing job destroying tax hikes, the AFL-CIO’s financial transaction tax proposal should not be entirely surprising. What is odd in this case is that the proposal would reduce the value of investments in union pension funds which are among the most frequent traders of stocks, making one wonder who the unions think they’re helping.

    This latest tax increase, combined with all the taxes President Obama proposed to increase in his budget and all the taxes increased in the health care legislation, begs the question: when will all the tax increases finally stop?

    Unfortunately for U.S. taxpayers the end doesn’t appear in sight.

    Posted in Economics [slideshow_deploy]

    16 Responses to Stock Transaction Tax: Yet another Tax Increase

    1. Rainer says:

      Union leaders often don't understand capitalism. They want the freebies from Washington to keep flowing, and are simply looking to keep it funded.

    2. Freedom of Speech, T says:

      The left wing liberals believe that ANY tax has a great deal of merit.

      The abuse of the 16th Amendment by our so-called "representatives" is dangerous to our life, liberty, and the pursuit of happiness.

      These people are displaying why a relative few brave Americans faught against the tyrant King George III of England. Before it was oppressive taxation without representation.

      NOW, it is oppressive taxation WITH representation in name, only.

      Yet, some of these characters have the audacity to state that every day folks are "Un-American"?

    3. Peter Asher, Oregon says:

      This is the ONLY tax proposal that actually makes sense!

      “Taxes on financial transactions if levied globally would diminish the efficiency of” trading programs and day and short term in-and-out trading, all of which do absolutely NOTHING to create jobs.

      Only money invested in an IPO can create a job other than in the field of buying and selling of stocks.

      The volume of profit/loss trading only serves to exaggerate market movements creating higher costs for 401-K investors in uptrends and diminishing fund raising and cash outs in corrections.

      The trading market only serves to transfer wealth amongst speculators and since the advent of online trading, commission are pittances of what they once were.

      Raising money for job creation by taxing activity entered into to avoid having a productive job would be a true stimulus.


    4. Roger S., Ma. says:

      "Improving business confidence is the great missing ingredient holding back a strong economic recovery. Serially threatening the economy with new taxes and new regulations is no way to improve the confidence of America’s families and businesses of a prosperous future." –Period! Is that intentional?

      They still don't get it that taxes do one thing only: transfer income/capital from the productive private sector to the unproductive public sector. Those sums add up to private disinvestment to be "compensated" by a public non-investment. –Period. Is that intentional too?

      Worse, the threat of (unpredictable) taxes is an even greater killer of private initiative than the tax itself. –Period. Also intended?

      Government jobs will be the only ones creatable, after a while.

      Because whole industries will be destroyed, or move "offshore".

      That will leave us with only unprofitable "government industry", and no private industry left to tax to sustain it.

      It will then be "interesting" to watch Government trying to tax itself. –Interesting, but not "funny"! Period.

      Whoops! Isn't that the way to import Communism via the back door, you ask? When the front door would be "shooting" at you?

      Yup, exactly. That's the whole idea. The "Nomenclatura" (aka Democrat Congress) is already in place, and most of the "Apparatchiks" (aka as WH "Czars" and Federal department heads)!

      Syllogism(s): If Communism is the practice that claims making money move from the "right" pocket to the "left" pocket is "making money", then Marxism is the economic "theory" needed to claim that science is irrelevant to social action. (Both are required to support in action a fictitious "theory" of Anthropogenic Global Warming!) –Also intended? Good guess!

      Happy future "serfdom", all!

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    6. Bob, NYC says:

      To the Congressmen who propose this tax:

      Are you aware that by trying to curtail active trading while promoting long-term investing with this new tax you are actually decreasing the tax revenue received by the Treasury? A buy and hold investor pays taxes on his/her profits when they sell their holdings and are taxed at the capital gains level, currently 15%. A short term trader does not get this treatment and his taxes are calculated as income, with rates as high as 35% (soon to raise to 39.6%). So who pays more? The buy and hold guy at 15% or the active trader at 39.6%?

      Personally, if I were a smart Congressman looking to increase revenue for the Federal government then I would look at the behavior which would tax at higher rates than lower rates.

      This tax is just a punitive measure RE-introduced by the Congressman from Oregon against an industry HE is appalled by. This is punitive and petty and beneath that of an official we elected to represent us and our needs, not his own biases. And in the end, it becomes a tax on the middle-class who would use the stock market as a means to save or increase their wealth at a time when an irresponsible Congress allowed and promoted irresponsible people to play the real estate game like it was the game monopoly. Trading stocks did not cause this crisis, extending mortgages to people who had no means to service their mortgage caused this crisis, and it has hit the middle class the most – the same class that this President swore he would not raise taxes on.

    7. Tom Davis, Los Angel says:

      Sweden tried this tax in the 1970's and later repealed it because it caused a 60% drop in stock trading volume and resulted in significant layoffs in the financial services industry. The result was that the amount the tax raised was LESS than the capital gains tax and income tax revenues lost.

      Unfortunately, the desire for revenge against Wall Street has eclipsed experience and common sense. On the positive side, Senator Charles Schumer (D, NY) has come out strongly against the tax, as has Treasury Secretary Geithner.

    8. Jason says:

      It's an ill-directed, globally unworkable revenge tax pushed by a minority of power-hungry and peculiarly under-informed, unwise US senators. Some of whom have embarrassingly insufficient qualifications (Ms Pelosi?) to be engaging in high level discussions with the wiser, higher educated Mr Timothy Geithner.

      Ms Pelosi's embarrassing urge to over-influence her superior colleague, the outstandingly qualified and circumspect Timothy Geithner, should automatically disqualify her from dangerous involvement in high-level financial discussions.

      Such a tax would unjustly victimise innocent main street taxpayers who did not contribute to America's economic (presently stablising) woes. This ridiculous tax's potential to damage the US economy and further de-stabilise financial markets, will never be accepted abroad as another US driven error of judgement.

      The tax would not get any traction, as Ms Pelosi incorrectly proposes it would, especially without full global agreement. Most foreign nations will not sign up to a legally binding agreement for their own unique economic/constituent/fiscal reasons. National governments will not sacrifice their autonomy, just because a couple of US senators think it could be in US interests.

      The world no longer listens to America's every word!

      Other nations would see a global tax as US interference (haven't we all had enough of that?) in their affairs. None of today's national governments can legally guarantee that their governments of tomorrow would not dismantle any new tax, or any other tax burden for that matter!

      If the US wants to retrieve money, they should be taking it from banks that sold risky loans to sub-prime sharks, and further on to people who could not guarantee repayments.

      A hate tax, directed at investors and small-time, taxpaying, main street families will deepen unemployment and further spook your markets.

      The rest of the world is too smart to involve their economies and tax structures in any commitment proposed by Ms Pelosi. She's having far too much to say —

      Some countries are already salivating at the prospect of relocating American financial transaction centres to their welcoming shores, should Mr Geithner permit Ms Pelosi to have her way. Highly unlikely, I would think.

    9. Thomas Barrington Il says:

      The Obama administration and the rest of the Democrats on the hill are no different then an amoeba, a one cell form of life. These people have but one idea for everything and anything and that is to TAX. When will these well educated people learn that taxing everything that moves is the major hold back to any chance of economic recovery. IDIOTS

    10. Stirling, Huntingdon says:

      More re-distribution from the private sector to the government going on here. The problem here is that it will affect all investors (here and abroad) which will decrease investment in our stock market, and force people to move their money to foreign exchanges due to the tax/fee. It sounds more like an economy killer then a true way to support or help the country. Is this is really what this country has been reduced to? (looking for every insane way of bleeding the money out of the economy for social programs). This country deserves a better way then just "Tax" everything. Here's an idea "cut spending first." If this government can't do that then they don't deserve our hard earned money.

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    13. Chris, New York says:

      When will the US Gov't learn that instead of looking for more revenue in the form of coercive taxes, it should actually (gasp!) look for ways to cut spending?

      You buy a stock, it will get taxed. You make some money on it, you will get taxed via capital gains. You sell the stock—another tax for you there. You get taxed even if you lose now under this proposal.

      It just boggles my mind why there are people in favor of even more taxes in this country.

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    15. Sylvia, Longmont, CO says:

      Simply put: This tax would impact IRAs and 401 investments considerably. No consideration for the retired people whose investments would be taxed on transactions within IRA and 401s…More proof that the older/senior generation is the forgotten generation. This tax does not make sense.

    16. Ron, Zanesville,Oh says:

      The leadership of this country will reduce tax revenue by passing this tax. Fewer trades will lower the Broker's revenue causing them to have lower profits decreasing thier tax liability and the need for agents causing lay-offs.

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