From economist and friend Stephen Moore, the latest inconvenient truth: South Dakota tops the list…
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Image of the Day: Guess Which States Boast Lower Unemployment Rates?

From economist and friend Stephen Moore, the latest inconvenient truth:

South Dakota tops the list again at 2.9% unemployment – exactly the same as where it was 12 months ago. The only states with Democratic governors in the top 10 – Kansas and Wisconsin – had Republican legislatures and courts that blocked school closures and lockdown orders. And the same basket case lockdown states are at the bottom – California, New York, Hawaii – barely recovering still."

[caption id="" align="aligncenter" width="410"] Guess Which States Excel[/caption]…[more]

March 29, 2021 • 03:55 PM

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Proposed Financial Transaction Tax and Regulations Would Punish Everyday Investors and Retirees Print
By Timothy H. Lee
Thursday, March 04 2021
[T]he suggestion that a new tax on financial transactions won’t punish everyday Americans is flatly untrue.

In the latest example of the political left cynically leveraging passing events to impose their longstanding wish list, some Congressional Democrats and their outside ideological minders seek to exploit recent stock market volatility centering on the GameStop episode to advance a new array of regulations and taxes.  

Topping that list is a financial transaction tax and prohibition on short-selling, and they hope to leverage public concern to impose an agenda they’ve been pursuing for years.  

Specifically, proponents demand what they deceptively label a “small” 0.1% tax on all financial transactions involving the sale of stocks, bonds and other financial instruments.  They claim the tax could raise $1 trillion in new federal tax revenues over the upcoming decade, and predictably insist that it will merely hit the wealthy and Wall Street oligarchs.  

The reality is quite different, and potentially ugly for everyday Americans.  

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.  

Should those retirement accounts take a hit, taxpayers will naturally be on the hook to bail them out.  Whereas private employers can more often declare bankruptcy and have pension obligations adjusted accordingly, the public sector and its powerful unions – whose income already relies upon taxpayers – can muscle lawmakers into soaking taxpayers to endlessly bail them out.  

Another fatal defect with the proposed new financial transactions tax is that it wouldn’t raise the new federal revenues that proponents predict.  

Among other defects, their prediction employs static analysis, ignoring the fact that their tax would alter future behavior by investors.  In contrast, the Congressional Budget Office (CBO) and other observers acknowledge that dynamic reality in their own studies, which concluded that the new tax would “decrease the volume of transactions” and “probably reduce output and employment.”  That’s why many expect that the new tax would raise far less new revenue – or even “no revenue” – than supporters advertise.  

Other nations’ experiences confirm that reality, not least because a financial transaction tax would prompt capital and investors to seek other jurisdictions outside of the United States where no such taxes are imposed.  

For example, Italy and France raised less than 25% of predicted revenues after imposing similar taxes in 2012, while Sweden abandoned its own financial transaction tax after six years because traders relocated to avoid the tax, which in turn slashed the amount of incoming revenues.  As comprehensively summarized by the Center for Capital Markets, that experience of lower revenues and fewer financial transactions also occurred in Germany, Norway, the Netherlands, Denmark, Austria, Spain, Portugal, Italy and Japan.  

And while some have had success in making “short selling” a bad word in popular discourse, the proposal to limit or prohibit that practice would prove equally destructive for American markets and retirement accounts.  

Short selling simply refers to the common practice of betting that a particular stock is currently overvalued.  Contrary to popular myth in some circles, it is not the cause of market crashes or economic recessions, but rather incentivizes wise investing by signaling to markets that certain stocks are likely overvalued, thereby softening the impact of upcoming downturns.  Short sellers who recognize market bubbles actually prevent downturns from causing even steeper drops and investor losses.  

Accordingly, a new prohibition on short selling would reduce buying and selling, which would amplify future price jumps and declines.  That’s the opposite of what proponents claim.  

Thus, the financial transaction tax and other regulatory proposals would punish tens of millions of Americans, fail to raise the revenues predicted, drive investors overseas and increase market volatility.  

Congress and the American electorate should recognize this effort for what it is:  Just the latest leftist effort to sacrifice American consumer and investor wellbeing at the altar of their extremist agenda.  

Quiz Question   
Which President signed the first federal gas tax into law?
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Notable Quote   
 
"Oddly, after dedicating his inauguration to national unity, Biden has abandoned the pursuit entirely. ...It's not clear what changed so drastically for Biden since his inauguration. Reporters say he now envisions himself as the next FDR -- changing our country through massive government intervention. In a nation as divided as ours, this sort of aggressive left-wing movement is sure to increase the…[more]
 
 
—Neil Patel, The Daily Caller Co-Founder
— Neil Patel, The Daily Caller Co-Founder
 
Liberty Poll   

Is it a reasonable use of taxpayer money for the federal government to provide a new $100 billion in tax credits to purchasers of electric vehicles?