Jan. 29 (Bloomberg) -- Taxing equity trades may reduce U.S. stock market volume by 90 percent, Interactive Brokers Group Inc. Chief Executive Officer Thomas Peterffy said.Of course, the bill's sponsonrs have no understanding whatsoever of the consequences, but does it really matter to them?
A transaction tax was first discussed in February and revived in December, when Iowa Senator Tom Harkin and Oregon Representative Peter DeFazio said it is the “most painless way” to fund the government’s deficit and curb speculation. French President Nicolas Sarkozy said Jan. 27 that a European debate on the subject is unavoidable.
The proposals from Harkin and DeFazio, both Democrats, would impose a fee on transactions of stocks and derivatives, aiming to raise money for economic stimulus plans. The U.S. government’s budget deficit in the fiscal year that ended Sept. 30 was a record $1.42 trillion.
Sarkozy joined U.K. Prime Minister Gordon Brown and German Chancellor Angela Merkel in supporting a tax on trades. In Europe, the money raised could be used to fund climate measures or aid for poor nations, Sarkozy said. He leads the world’s fifth-largest economy.
The bill’s sponsors have “no understanding whatsoever” about its likely effect, Peterffy said.
Here's my opinion: currently, the financial industry is perceived as evil, politicians have very low approval rates because they handed out trillions of dollars/pounds/euros to the bankers and now, it's a good way to gain some voters' approvals by taxing the financial industry and it cannot hurt neither their finances...
Do you remember a couple of years ago, when oil was trading at $147 a barril? What happened then? The UK government was trying to tax the "disgusting and shameful" super-profits of BP and Shell, while the French government was looking into the same super-tax for super-profits targetting Total...
Next year, it's going to be another industry that is going to be evil, politicians will always come up with newer taxes, the older taxes will remain, as usual, and the burden of the state on the people is going increasing. That has been going on for about as long as each state exists.
At some point, the back of the people breaks. And when this happens, it's either a revolution, a civil war, a hyperinflation that cleans the country from its evil government and there's a fresh start again.