For a man who constantly claims to support "Buy American," Joe Biden demonstrates an inexplicable and…
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Inexcusable and Dangerous: Biden Administration Surrenders U.S. Patent Rights to World Trade Organization (WTO)

For a man who constantly claims to support "Buy American," Joe Biden demonstrates an inexplicable and almost fetish-like tendency to undercut American industries.

Since day one, the Biden Administration has ceaselessly besieged a domestic energy sector that finally achieved U.S. energy independence after decades of effort.  And now, it is following through on its inexcusably foolish assault against the U.S. pharmaceutical sector.

Each year, American pharmaceutical innovators account for an astounding two-thirds of all new lifesaving drugs introduced worldwide.  That's the direct result of our system of intellectual property (IP) protections, including patents, which consistently leads the world.

Instead of protecting that legacy of American Exceptionalism, however, the Biden Administration…[more]

June 17, 2022 • 12:30 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   
What is the current estimate of collective losses to American retirement accounts since January 2022?
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Notable Quote   
 
"Mocking climate-change warriors for their private jets and yachts, far-flung vacation homes, and chauffeured SUVs has become routine among jaundiced observers of the world's increasingly numerous environmental conferences. Such mockery hasn't had the slightest effect on the conferees' conspicuous consumption of the miraculous products of Western innovation and capitalism. The celebrities and climate…[more]
 
 
—Heather Mac Donald, Thomas W. Smith Fellow at the Manhattan Institute, Contributing Editor of City Journal, and New York Times Bestselling Author
— Heather Mac Donald, Thomas W. Smith Fellow at the Manhattan Institute, Contributing Editor of City Journal, and New York Times Bestselling Author
 
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