Friday, December 04, 2009

US Democrats propose financial transactions tax, Congress stops estate tax repeal

Bloomberg reports:

"A group of congressional Democrats proposed taxing large transactions in stocks and derivatives."

A figure of $150 billion is cited as the revenue-raising potential. Iowa Senator Tom Harkin called a tax the “most painless way” to raise revenue and stop risky market speculation, and added:

“Ask not what America can do for Wall Street, but what Wall Street can do for America.”

The proposal would levy:

"a tax of 0.25 percent or 25 basis points to stock transactions in excess of $100,000, and a levy of 0.02 percent or 2 basis points on derivatives including futures, options, swaps and credit default swaps.

Harkin and DeFazio said the proposed new levy is backed by more than 200 economists, the AFL-CIO labor union federation and business leaders including Warren Buffett and Vanguard Group Inc. founder John C. Bogle, now president of Bogle Financial Markets Research.

“There’s certainly money” in taxing stock and derivative trades, one analyst said, “but this bank is just too well guarded” by lobbyists who oppose the idea." The Obama administration doesn't seem to be supporting it either.

There is good news for ordinary Americans on the Estate tax, though. As the Associated Press reports:

"The House has voted to permanently extend a 45 percent inheritance tax on estates larger than $3.5 million, canceling a one-year repeal of the tax set to begin next month."


Blogger Physiocrat said...

For a proposal to gain support from those economists and trade unionists, etc, it must almost certainly be wrong-headed. They do not have a good track record and such ideas rarely stand up to scrutiny.

Inheritance Tax is a useless instrument. A handful of aristocratic families still own most of the valuable areas of central London even after a century of inheritance tax.

Why don't people look at history before they announce their wonderful ideas?

4:26 am  

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