The AFL-CIO, in concert with some Congressional leaders, has proposed yet another tax hike to fund Washington’s ongoing explosion of spending. This latest collaboration between Big Labor and Big Government would be a 0.25 percent tax on all stock trades. Given the budding deficit pressures another tax hike proposal is hardly surprising, but, curiously enough, this new tax would target the pensions of the AFL-CIO’s own members.
Congressional leaders have decided to divide their attention for the rest of the year between a hostile (to patients) takeover of the health care system and feigning concern over rising unemployment. Their new focus on reversing job losses is a tacit admission that the stimulus plan passed in February has failed and that high unemployment rates are likely to persist well into 2011 and beyond.
But any potential job creation bills will likely cost billions of dollars. And Congressional leaders recognize the public is tired of over-spending and growing deficits. To pacify these concerns they plan to pay for their latest dubious effort to spur job creation with the new financial transactions tax.
Supporters of higher taxes and larger government have often suggested taxes on financial transactions in various forms as a way to pay for any number of government spending programs, and as a cure for persistent deficits. Just recently, United Kingdom Prime Minister Gordon Brown proposed such a tax on a global scale. The idea, immediately shot down at home, was quickly deflated internationally when U.S. Treasury Timothy Geithner rightly and quickly gave it two thumbs down.
Taxes on financial transactions if levied globally would diminish the efficiency of financial markets, destroying jobs on a global scale. If such taxes were enacted in the United States, it would sound the death knell for much of the domestic financial industry. Given their penchant for proposing job destroying tax hikes, the AFL-CIO’s financial transaction tax proposal should not be entirely surprising. What is odd in this case is that the proposal would reduce the value of investments in union pension funds which are among the most frequent traders of stocks, making one wonder who the unions think they’re helping.