Just in time to capitalize on the Occupy Wall Street movement, Tax-&-Spend Democrats in Congress are proposing another new tax.
Phil Mattingly of Bloomberg News reports, Nov. 1, 2011, that Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Oregon), introduced measures in their respective chambers to impose a transaction tax on financial firms that is modeled on — Wait! This is brilliant! — the European Union that is neck-deep in debt of country-bankrupting proportions.
The EU in September proposed a financial- transaction tax that would take effect in 2014 and raise about $57 billion euros ($78 billion) a year. Germany and France have led a push for global implementation.
While the EU proposal would apply a tax of 0.1% on trades of stocks and bonds, the proposed Harkin-Defazio tax would be “about three basis points” or 0.03%. “It’s a significant way to raise some needed revenue,” Harkin said. “Quite frankly, I bet nobody would even feel it.”
Dems have the backing of the usual suspects: unions, like the AFL-CIO and National Nurses United, a professional association and union for nurses. Both groups have scheduled a rally in front of the Treasury Department today in support of the fee. Americans for Financial Reform, an umbrella group of unions, civil rights lawyers and consumer advocates, is circulating petitions in support of the measure.
The chances a transaction tax could pass in the U.S. “are less than 50/50” primarily because of Republican opposition, Brian Gardner, senior vice president of research for Keefe, Bruyette & Woods Inc. in Washington, said in a Sept. 28 note to clients.
U.S. exchange operators fell the most since August on the news that the lawmakers would propose the tax.
NYSE Euronext (NYX) declined 6.8%, the most since Aug. 18, to $24.76, while Nasdaq OMX Group Inc. (NDAQ) fell 2.8% to $24.36. CME Group Inc. (CME) slumped 8.6% to $251.88 in the biggest retreat since Aug. 10.
Sam Ginzburg, a partner and head of capital markets at First New York Securities LLC, a New York-based proprietary trading firm, said the exchanges would be negatively affected by the proposed transaction tax because “volume will drop off. I shudder to think of the landscape of the market if this happens.”