Tax on Financial Transactions Would Punish New Generation of Retail Investors
Legislation introduced in the House of Representatives aims at imposing a tax on financial transactions – the buying or selling of stocks, bonds and derivatives – in order to curb speculation, and fund so-called “national priorities.”
Backers contend the tax would raise $777 billion over the next decade, while “restricting the excessive trading that is designed to manipulate the markets instead of benefiting the overall economy.”
Opponents of the proposed tax have banded together and sent a letter to Congress, in which they the idea 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.
Even a modest tax reduces returns on investment. For day traders, the costs would be much higher. But as is also the case, it is individuals, not “Wall Street” who would pay the tax.
The rise of retail investors, who are increasingly using non-traditional platforms like phone apps to buy and sell stocks, bonds, cryptocurrencies, and more also shows the tax is aimed at a bogeyman who doesn’t exist. These new investors – a portion of whom have used their government stimulus checks to dabble in the stock market — are disrupting Wall Street business models and creating wealth where it didn’t exist before.
That’s something to be encouraged, not punished.
Image Credit: By Cellofellow (Gadsden_flag.svg) [CC0], via Wikimedia Commons