Congress is discussing yet another tax increase. This one would be a tax on stock transactions and could fund a new jobs bill since it has become apparent to everyone that the stimulus failed to create any jobs on net. This was underscored again when the Labor Department reported Friday another 11,000 job loss for November.
The job-destroying stock transactions tax gained traction this week when House Speaker Nancy Pelosi said she “believe(s) the transaction tax still has a great deal of merit.” Improving business confidence is the great missing ingredient holding back a strong economic recovery. Serially threatening the economy with new taxes and new regulations is no way to improve the confidence of America’s families and businesses of a prosperous future.
The push for the tax began a few weeks ago when the AFL-CIO, in concert with some Congressional leaders, began a new campaign for 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.
This latest tax increase, combined with all the taxes President Obama proposed to increase in his budget and all the taxes increased in the health care legislation, begs the question: when will all the tax increases finally stop?
Unfortunately for U.S. taxpayers the end doesn’t appear in sight.