Archive

Posts Tagged ‘stocks’
March 10th, 2021 at 9:11 am
Coalition to Congress: A Financial Transaction Tax Will Harm American Savers and Investors
Posted by Print

In our latest Liberty Update, we highlight how a financial transaction tax and new market regulations would punish everyday American investors and retirees.   Yesterday witnessed significant movement on the issue, as CFIF joined a broad coalition of 27 organizations representing millions of Americans across the nation in urging Congress to reject any proposal to implement a financial transaction tax on Americans:

An FTT is the latest attempt by the left to take advantage of a ‘crisis’ to implement a massive new tax on the American people.  Contrary to their rhetoric, this tax would be borne by the American people, not Wall Street.  It would punish investment, leading to lower returns for American retirees and savers and increased market volatility.  It fails to raise as much revenue as supporters claim, and has failed everywhere it has been tried in past decades.”

Unfortunately, some in Congress nevertheless invite that potentially catastrophic risk.  Yesterday, Senator Chris Van Hollen (D – Maryland) advocated a financial transaction tax during a hearing before the Committee on Banking, Housing, and Urban Affairs.  Senator Van Hollen confirmed that Senators Elizabeth Warren (D – Massachusetts) and Brian Schatz (D – Hawaii) stand ready to introduce such legislation, falsely asserting that, “We know that Wall Street has made an art of high-frequency trading and rank speculation that’s fattened the wallets of a few, while putting everyday investors at greater risk.”

But as we noted specifically in our most recent piece on the matter, the exact opposite is true:

Any financial transaction tax will inevitably impact millions of Americans who rely upon investments to sustain their pensions, 401(k) plans, index funds and other retirement accounts.  Today, 53% of American households own stocks, while between 80 million and 100 million possess 401(k) accounts.  According to one recent analysis from the Modern Markets Initiative, the proposed financial transaction tax could mean a hit of $45,000 to $65,000 to 401(k) owners over the lifetime of their accounts.  Accordingly, the suggestion that a new tax on financial transactions won’t punish everyday Americans is flatly untrue.

In fact, the hardest-hit would be those who rely upon public sector employment pensions, such as police, firefighters, teachers and other public servants whose retirement accounts rely heavily on markets for retirement.  They stand to lose billions of dollars every year to the proposed tax, meaning significantly reduced savings and retirement incomes.”

Our broad coalition has it right, and Senators Van Hollen, Warren and Schatz have it wrong.  A financial transaction tax would sacrifice American consumer and investor wellbeing at the altar of a broader politically motivated agenda.

March 30th, 2020 at 10:34 am
Some Potentially VERY Good Economic News
Posted by Print

Here’s some potentially VERY good economic news that was lost amid the weekend news flurry.  Those with “skin in the game,” and who likely possess the best perspective, are betting heavily on an upturn, as highlighted by Friday’s Wall Street Journal:

Corporate insiders are buying stock in their own companies at a pact not seen in years, a sign they are betting on a rebound after a coronavirus-induced rout.  More than 2,800 executives and directors have purchased nearly $1.19 billion in company stock since the beginning of March.  That’s the third-highest level on both an individual and dollar basis since 1988, according to the Washington Service, which provides data analytics about trading activity by insiders.”

Here’s why that’s important:

Because insiders typically know the most about their companies’ outlook, evidence of buying can signal corporate optimism and reassure investors, especially in times of turmoil.  ‘I’ve never seen a number like that before,’ Dr. Nejat Seyhun said, referring to the buy-to-sell ratio that he calculated for the energy sector.  Beyond Marathon Oil, insiders at companies including Exxon Mobil Corp., Sunoco LP and Continental Resources Inc. have also purchased shares.  He said the increased level of buying may signal that energy executives believe ‘the oil price war is not going ot last too long.’  Dr. Seyhun’s research over the years has found that insider activity can be a ‘solid’ predictor of future returns.  Stocks that insiders purchased during the 1987 stock market crash ‘bounced back,’ he said.”

We often malign insiders who dump stock before a downturn, so in this case we should welcome the signs of spring that insiders who tend to be most knowledgeable and possess actual skin in the game are heavily optimistic.  As we noted in our Liberty Update commentary last week, that may signal a closer similarity to 1987’s crash, which witnessed a return to normalcy and prosperity soon thereafter, as opposed to 1929 or 2008.  Staying the course on the lower-tax, less-regulatory environment that gave us the strongest economy in history when we entered this pandemic will help along the way.

 

 

July 30th, 2010 at 1:11 pm
Barclays Capital Study Echoes CFIF on the Danger of Raising Taxes on “The Rich”
Posted by Print

We note in our Lunchtime Liberty Update this week that the Obama Administration’s class warfare campaign targeting “the rich” will inflict further harm on our economy.  Not only would such tax increases hit small businesses (which create most new jobs in America) particularly hard, it would also penalize the income segment that accounts for 1/3 of consumer spending, which itself accounts for 2/3 of the nation’s economy. Confiscating even more of those dollars may sound fine on a teleprompter, but it will bring destructive consequences in the real world.

Now, a new study by Barclays Capital highlights another potential harm.  According to their analysis, Obama’s plan will cause a 9% drop in the S&P 500 and a 900-point drop in the Dow Jones Industrial Average.  As noted in this morning’s edition of The Hill, that would result from the Obama Administration’s focus on taxing upper income segments:

The Barclays report attributes the potential stock drop to President Obama’s plans to increase taxes on wealthy individuals, who are the country’s chief investors.  The report claims high earners are likely to shift their investment strategies because of the coming tax increase.  ‘According to the Fed’s 2007 Survey of Consumer Finances, 75 percent of stock market wealth is held by families in the top percentile of income,’ the Barclays report states.  ‘From a behavioral standpoint, if the government follows through on its plan to raise dividend and capital gains taxes for the highest income earners, it could influence the asset allocation decisions of an important investor class and potentially bring about a shift away from equities, with negative knock-on effects for the economy.'”