Politics Progressives should know a financial transaction tax would hurt average Americans
Sinema emerges as Senate dealmaker amid progressive angst
Sen. Kyrsten Sinema (D-Ariz.) is leaning into her role as the Senate's newest dealmaker amid rising pressure from progressives who are increasingly irritated over the centrist's support for the filibuster.Sinema is betting that she'll be able clinch big bipartisan agreements that have become increasingly elusive, burnishing her credentials back in Arizona where frustrated activists are already sending early warnings about a 2024 primary. SheSinema is betting that she'll be able clinch big bipartisan agreements that have become increasingly elusive, burnishing her credentials back in Arizona where frustrated activists are already sending early warnings about a 2024 primary.
The move to institute a financial transaction tax, which purports to target Wall Street fat cats, big investment companies and others such as hedge funds, is among the latest bad economic ideas supported by politicians who exalt their own good intentions.
Some of the financial services firms being targeted have received publicity because of market issues, such as retail investor purchases of "," that prompted a before the House Financial Services Committee this year. Such events provide fodder for those who desire to stick it to financial services companies.
Global tax reform plan goes to the G20
G20 finance ministers meeting in Venice on Friday and Saturday could rally the world's top economies behind a global plan to tax multinationals more fairly, already hashed out among 130 countries representing 90 percent of world output. Italian Finance Minister Daniele Franco, whose country holds the G20 presidency, said he is "confident" of reaching a "political agreement" among finance ministers in Venice that would "radically change theOn the face of it, the Group of 20 -- the world's 19 biggest economies plus the European Union -- have already backed the framework for global tax reform, agreed on July 1 among members of the Organisation for Economic Cooperation and Development (OECD) alongside
Rep. Maxine Waters (D-Calif.), who chairs the Financial Services Committee, reportedly is rushing to schedule a markup of her, to target short selling. Capitalizing on popular sentiment around January's to hurt short sellers may be appealing, but limiting short sellers' ability to spot market inefficiencies and even fraudulent activity (such as the ) ultimately could hurt financial markets.
Waters has said she isa financial transactions tax. Other proponents employ standard talking points about Wall Street bonuses and tout the "very low rate" of such a tax to try to garner support. Sen. Brian Schatz (D-Hawaii) has reintroduced his , which has a 0.1 percent tax on every sale of stocks, bonds and derivatives (a was introduced in the House in January). The low rate perfectly illustrates the misleading nature of such a tax.
Lobbyists, moderate Democrats rely on debunked arguments against tax hikes
By caving to lobbyists and opposing Biden’s proposed tax increases, centrist Democrats in the Senate risk missing a crucial opportunity to maximize the upsides of taxing the rich. The policy and political benefits are clear - Democrats just have to get out of their own way.Erica Payne is founder and president of the Patriotic Millionaires.
In fact,by SIFMA, a trade association for broker-dealers, investment banks and asset managers, notes that Vanguard estimates that for many average investors, a tax at this rate would cost a retirement saver who invests $10,000 per year over 40 years in a balanced portfolio of stocks and bonds around $36,000, or three and a half years' worth of savings. This calculation might also apply to a typical middle-class head of a family. Put another way, these investors are far from being Wall Street "fat cats."
the Federal Reserve show that 53 percent of American households own stock and 80 million to 100 million Americans have 401(k) saving and investing plans. Those with pension plans - such as teachers, police, firefighters and other public-sector employees - hardly would be spared, either. A Modern Markets Initiative found that a financial transactions tax would cost these plans billions of dollars, which would lower the savings and retirement income for participants. Leaving pensions underfunded, and possibly asking for taxpayer-funded bailouts, would worsen the situation for all.
On The Money: Democrats reach deal on $3.5T target | Biden rallies Democrats: 'We're going to get this done'
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Others who advocate for a financial transactions tax say they are going after hedge funds and promoting public universities. For example, theintroduced by Sen. Bernie Sanders (I-Vt.) is paired with his to make Wall Street pay for his idea to offer free college tuition.
Hedge funds may make easy verbal targets but, as with retirement plans, there would be consequences for. Pension plans rely quite a bit on investments made through hedge funds - close to 26 million workers benefit from such arrangements, with investments totaling nearly $790 billion. Nationwide, more than 300 colleges and universities invest a total of $145 billion in hedge funds, and there are investments totaling $500 billion from nonprofits, charitable foundations and endowments.
University endowments are a primary source of financial aid for students, research conducted by universities, faculty salaries, and other projects. Hampering the ability of schools to realize investment gains will lower the amount of money available for such uses, including assistance for lower-income students.
Tax Preparer Sentenced to a Year for Not Paying Her Own Taxes
A Virginia woman has been sentenced to one year and a day in prison for failing to pay her taxes. Willette J. Holland, owner of Tax Professionals, came under investigation starting in August 2014 regarding her taxes. © Justin Sullivan/Getty Images California's sent out 2.5 million stimulus payments and if a person hasn't received one it may be because they haven't filed their taxes yet. In this Photo Illustration, twenty and five dollar bills are displayed on August 29, 2017, in San Anselmo, California.
Given the illusory nature of proponents' arguments, it will be telling to see how U.S. senators from Democratic-controlled states deal with the potential fallout from a financial transactions tax. Sens. Krysten Sinema (D-Ariz.) and Catherine Cortez Masto (D-Nev.) may be considered interesting examples. Recently releasedshow that hedge funds manage nearly $8 billion in institutional investments in Arizona and more than $2 billion in Nevada.
In Arizona, that amount includes managing more than $2 billion for the Arizona Public Safety Personnel Retirement System and the City of Phoenix Employees' Retirement System, as well as for both the University of Arizona and Arizona State University, which together serve about 100,000 students.
In Nevada, that same structure covers at least seven key retirement plans, including those for organized labor such as the Southern Nevada Culinary and Bartenders Pension Plan, the Nevada Resort Association IATSE Local 720 Retirement Plan, and the United Association of Plumbers & Steamfitters Local 525 Pension Plan, which combined have about 116,000 plan participants.
And Waters might be interested to know that in her home state, the California State Teachers' Retirement System leads all public pension funds in benefiting from lending securities to short sellers - nearly $78 billion worth,from the Securities and Exchange Commission.
In their zeal to hurt the "fat cats," progressives in Congress apparently don't mind hurting the retirement plans and other assets of average Americans - pensioners, teachers, firefighters, blue-collar workers, students and many others who depend on their investments. The proponents of a financial transaction tax should dedicate themselves to a different approach.
Mario H. Lopez is president of the, a public policy advocacy organization that promotes liberty, opportunity and prosperity for all Americans. Follow him on Twitter .
If Biden Burns AOC on $4 Trillion Deal, He’ll Pay the Price .
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