Is Congress serious?
A tax on stock transactions is nothing more than a death knell for the US markets.
Here are just a few of the false assumptions baked into the proposed securities transaction tax:
1. Congress actually cares about the deficit. Since when does Congress care about the ever growing deficit? If it really did, perhaps reining in spending is a better approach than continually raising taxes.
2. The only people making money in this economy are Wall Street bankers. Last time I checked professional athletes weren’t making a bad living with their multi-million dollar contracts. Perhaps they should shoulder some of the burden?
Just today in a speech that President Obama delivered in Allentown, PA, he stated that the money distributed to the Wall Street firms IS being paid back AND being paid back with interest AND the money paid back and the interest is reducing the nation’s deficit. So why do we need to increase taxes further ONLY on stock transactions? Aren’t there better ways to handle the national deficit?
This proposed securities transaction tax is extremely ill-placed and ill-timed. Some of the likely unintended consequences:
1. The tax will not only hit Wall Street, but it will hit its intended benefactors, Main Street. This would result in massive job losses and stifle innovation.
2. The amount of anticipated revenue generated from this tax will be reduced drastically as volume and, thus liquidity, in the market will drop off precipitously – increasing spreads on stocks traded, especially the less liquid stocks.
3. Traders will find volume overseas and thus diminish the viability of the US financial markets. Speaker Pelosi is misguided if she believes that the world markets will follow the US lead. In fact, they will likely think just the opposite and see this as an opportunity to drive volumes to their own financial markets.
Anyone want to move to Europe???
