Described as a bad idea whose time probably hasn’t come. Among many other tax initiatives, there is now a proposal to tax the sale of stocks, bonds and derivatives at a rate of 10 cents per $100 of transactions. That two New Yorkers are among the co-sponsors is surprising, considering the harm this would bring to financial markets and the negative impact it would have on local employment. It is draped in objectives like “reducing speculative trading”, “addressing economic inequality”, “reducing high risk and volatility” and “redirecting investment that has flooded into transactions without economic value into more productive areas of the economy” (emphasis added). I position this as yet another revenue source for new spending, income redistribution and to fuel anti-Wall Street sentiment. While this is more a political message than a plan likely to become law, it’s a sign of the times. It is a sales tax on investors and another drag on investing and saving. A .1% tax on a relatively modest $10,000 ETF purchase, for example, would cost $10 – more than double the commission charged by leading online brokers. Other major economies that have adopted such a tax have had overwhelmingly negative results.
On a similar note, and coming from the other side of the political aisle, is a proposal to increase the tax on corporations that buy back their stock. The 2017 tax cut law didn’t do anything to encourage companies to spend their new found cash on investment or wages, many choosing instead to buy back their own stock. Here again, there is not a lot of support for this and it’s not likely to become law.