Despite their obvious close friendship with Wall Street, the Democrats have placed a bullseye on the financial industry’s back. The Democratic leadership wants to restrict corporate buybacks, freshmen want to impose a wealth tax and a 70 percent marginal tax rate, and now a handful of officials want to slap a financial transaction tax on securities trades.
Senator Brian Schatz (D-HI) will soon propose a tax on financial trades, though the details are limited at this point. The idea would implement a levy – typically a fraction of a percent – on each trade.
The purpose? None other than more money for the government to squander on progressive cause du jours. It’s also noted that the Democrats want to limit high-frequency trading – a process of algorithmic trading that buys and sells large volumes of shares at high speeds.
It is estimated that a 0.1 percent tax would generate $777 billion over a decade. But it would inevitably be lower because capital would become costlier, so businesses would raise less of it. Moreover, it would slash liquidity in the markets.
With the 2020 election on the horizon, the Democrats are appealing the lowest common denominator and the emotion of envy to regain power. The Dems probably wouldn’t institute such a tax, but it’s still a worrisome idea.
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