There’s a shocking piece of news circulating on its way to you via word of mouth, print media, and fiber–optics. And it’s something that may come as a bit of a surprise – even a shock – to the stock traders of the world. The news? That you’re all a bunch of monsters. Greedy. Wicked. And quite possibly demonic. At least that’s what some in this world would like to believe is the truth. And what’s more, they want to tax you for it.
In Washington DC’s undaunted quest to tax the living daylights out of every move made by its faithful constituents and squeeze the last living drop from every penny honestly earned, Congress is in talks now to instate a “securities transaction tax” that will, in effect, skim profits off practically every stock transaction made. It’s called the “Let Wall Street Pay for the Restoration of Main Street Act” (cute, right?) and it proposes to impose a 0.25 percent tax on futures contracts, swaps and credit default swaps. What’s more frightening (and ominous) is that the amount to be taxed on options is as yet unspecified. The result? A drastically reduced opportunity for financial gain for investors, who may find it too costly to invest. And in a game fueled by the desire to turn profit, this could spell unimaginable harm for an industry entirely dependent on the optimism of investors to be able to do so. Investment activity would surely experience a substantial decrease, in particular on the part of investors who would likely be scared away by the prospect of higher cost. No surer way exists to stunt financial growth than that.
As if you didn’t already feel ganged up on enough, New York state is also considering reinstating the stock transfer tax. Or, more accurately, to repeal the stock transfer tax rebate that’s been in place since 1979. And although New York state governor David Paterson has expressed his opinion that imposing the stock transfer tax would be a bad idea, he did balk at Wall Street’s decision to circumvent high taxes on cash bonuses by paying them out in stock shares instead. Just to remind you that he’s still sore at you. Just in case, you know, you forgot.
You break, you buy. And in this case if you break, you pay. So goes the rationale that’s laid the blame of the entire financial crisis at the feet of Wall Street. Make no mistake, the great collection coffer has been passed, and it’s headed your direction with a pistol planted firmly in the ribs of every unwilling recipient it encounters along the way as if to say “Open your hearts and your wallets… or else.”
Geographic moves for career purposes are generally associated as strategic leaps forward, and rarely as tenuous steps backward. But with the slew of recent proposals that have been slammed onto the table as a means of fixing the economic crisis (without resorting to government budget cuts—heaven forbid), stock traders and the firms they work for may soon find themselves in the unthinkable position of taking the kind of action historically associated with despots and fugitives: skipping town. If New York repeals the stock transfer tax rebate, you might find yourself working in New Jersey if the NYSE makes good on its threats to head for friendlier pastures (a threat that was first made, and not acted upon, all the way back in 1905 when New York first levied the stock transfer tax). But if Congress passes the securities transaction tax, all bets are off. Unless someone can suggest a new island… preferably someplace warm year-round. Barbados
Stock Exchange, anyone?
Even if you forget for a moment the effect a reinstatement of the New York state stock transfer tax would have on employees of the NYSE, there are consequences for the state and its residents that can’t go without mention:
Chasing away the moneymakers is a recipe for disaster that’ll not only negatively influence Wall Street, but will have a devastating impact on the economy that makes Main Street a liveable place to begin with.
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