David Harsanyi on why the Stock Transaction Tax is a Terrible Idea

Posted by Kendall Harmon

For the investor (the person who risks the capital to create real live self-sustaining jobs), every investment, whether it results in a profit or not, would be taxed two more times.

What is near certainty is that this bill will succeed at driving traders to international markets that are escaping the stilted centralized economy that DeFazio and Perlmutter feel the need to champion.

It's a given that this misguided vengeance against Wall Street is comfort food for populist legislators, but "Wall Street" isn't stocked exclusively with revolting would-be criminals. It is made up of retirees, small-business owners, entrepreneurs and parents who invest in their kids' college funds. At last count, nearly 50 percent of Americans are, on some level, invested in the stock market.

If one was a hopeless skeptic, he might believe these legislators were trying to undermine private sector growth by re-appropriating wealth in such a ham-handed way. Even reliable liberal Sen.Chuck Schumer said that a Wall Street transaction tax had the potential to "harm economic recovery efforts by deterring capital investment."

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyStock MarketTaxesThe U.S. GovernmentBudgetThe National DeficitTreasury Secretary Timothy GeithnerPolitics in GeneralHouse of RepresentativesOffice of the PresidentPresident Barack ObamaSenate

Posted November 27, 2009 at 12:28 pm [Printer Friendly] [Print w/ comments]

1. John Wilkins wrote:

Actually, banks aren’t investing anyway. 

I have a sense this guy has the tax wrong.

November 27, 4:57 pm | [comment link]
2. Daniel wrote:

I have been doing quite a bit of Googling to research the U.K. stamp tax on securities transactions and find that most researchers believe it raises the cost of capital to corporations and that it has already driven share transaction activity to overseas electronic exchanges.  They see it as actually producing a net drop in overall tax revenue.  In addition, other countries with such taxes have either reduced them significantly in recent years (China and India), or gotten rid of them altogether (Germany and other EU countries - hardly bastions of conservative economics and taxation).

I think what I resent the most is comments from the sponsors of this bill that stock/option/future trading is an economically useless activity.  I remember Rep. DeFazio saying that day traders need to go and get real jobs that help the economy.  I might say that pseudo-populist, pontificating, politicians should do the same.

November 27, 11:38 pm | [comment link]
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