Among the foremost threats to individual freedom in America is the abusive and oftentimes lawless behavior…
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More Legal Shenanigans from the Biden Administration’s Department of Education

Among the foremost threats to individual freedom in America is the abusive and oftentimes lawless behavior of federal administrative agencies, whose vast armies of overpaid bureaucrats remain unaccountable for their excesses.

Among the most familiar examples of that bureaucratic abuse is the Department of Education (DOE).  Recall, for instance, the United States Supreme Court’s humiliating rebuke last year of the Biden DOE’s effort to shift hundreds of billions of dollars of student debt from the people who actually owed them onto the backs of American taxpayers.

Even now, despite that rebuke, the Biden DOE launched an alternative scheme last month in an end-around effort to achieve that same result.

Well, the Biden DOE is now attempting to shift tens of millions of dollars of…[more]

March 18, 2024 • 03:11 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.  

Notable Quote   
 
"It's a rematch.President Biden and former President Trump each hit a key marker last week, clinching enough delegates to become the presumptive nominee of their respective party.The outcome of the general election will come down to a handful of states, as usual.The map maintained by The Hill and Decision Desk HQ lists seven contests as toss-ups."Read the entire article here.…[more]
 
 
— Niall Stanage, The Hill
 
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