But it seems so smart! Read:
The nation’s largest labor union and some allied Democrats are pushing a new tax that would hit big investment firms such as Goldman Sachs reaping billions of dollars in profits while the rest of the economy sputters.
The AFL-CIO, one of the Democratic Party’s most powerful allies, would like to assess a small tax — about a tenth of a percent — on every stock transaction.
Essentially, it’s a sales tax. And it would get passed along to you, the investor. This nonsense that it would somehow just hit big, profitable investment firms is just that: nonsense. When sales taxes go up at Best Buy, do they eat it or ring it up for you to pay at the cash register?
Exactly.
So. Why is a sales tax on stock transactions a bad idea? Aren’t all sales taxes a bad idea? Well, no. Generally, it’s probably better (and certainly a lot less invasive) to tax consumption rather than income. But investments aren’t consumption — they’re investments; the expectation that the future will be better than today. Tax that, and you’ll get less of it. Smart!
But it’s a bad idea for another reason. When you buy a new fridge at Best Buy, you do so with the reasonable expectation that it will keep your food fresh. When you buy a toy for your child, it’s so that she’ll have something to play with. When you buy a meal at a restaurant, it’s to stave off hunger and maybe have a good time.
When you buy a share in a company, for all you know, it could be worthless before the end of the day. Unlike the shiny new fridge, your investments come with no guarantee. And if you do make money, you’re already required to pay some of the highest capital gains taxes on the planet.
Investing is risky enough, without Uncle Sugar coming along to demand his cut of even your losing bets.
Talk about being self-destructive. Does the AFL-CIO not realize how their pension funds are funded?
I think this is a fair proposal, as long as it is tied to a like tax on union membership dues.
I’d be curious to find out if the AFL-CIO would support the two together. Or do they just feel like most do that we should “tax the other guy”?
And taxing investments, which are risky enough, is going to lead to an even further decline in investment which leads to lower economic growth and thus lower tax revenues.
I suppose this is economics 201, but hasn’t there been already enough evidence that to promote economic growth (& thus new jobs & increased tax revenue) you want lower taxes?
Wouldn’t it be wicked awesome if we had a president who actually wanted Americans to prosper, instead of just being a toady to Big Union?
but hasn’t there been already enough evidence that to promote economic growth (& thus new jobs & increased tax revenue) you want lower taxes?
http://abclocal.go.com/kgo/story?section=news/politics&id=6087726
Remember the debate with Charlie Gibson where Gibson said something like, “You’ve all mentioned you want to raise the capital gains tax. Since reducing capital gains taxes has always resulted in increased revenue would you change that stance?”
Obama said he would raise it to get more money. Gibson said, no, lowering it has raised the amount taken in.
Obama responded
“Well, Charlie, what I’ve said is I would look at raising the capital gains tax for purposes of fairness,” said Obama.
It’s not as if he hid it.