Tell Congress to Block the Trader Tax

Sign the Petition : 75,928 Letters and Emails Sent So Far

On Friday, February 13, your colleague, U.S. Congressman Peter DeFazio, introduced H.R. 1068: "Let Wall Street Pay for Wall Street's Bailout Act of 2009", which aims to impose a 0.25% transaction tax on the "sale and purchase of financial instruments such as stock, options, and futures."

Without a doubt, many Americans are appalled at the reckless behavior of large Wall Street companies, and the notion of making those who are responsible for putting the global financial system in jeopardy help repay taxpayers for bailing them out is certainly justifiable.

Unfortunately, I feel that this proposal is the wrong way to do that, as this tax applies to all investors, the vast majority of whom have done no wrong. Effectively, this tax will punish anyone who wants to save their money, whether it be by investing in stocks or options directly, putting their hard earned money in any mutual fund, or by simply placing a portion of their paycheck in a 401K. There's no doubt that banks and mutual funds will pass along this added cost to their customers, giving this proposed tax a much further reach than was initially imagined.

Moreover, the unintended consequences associated with H.R. 1068 are also hard to ignore.

First, many hard-working Americans make their livings by running small businesses that trade stocks, options and other financial instruments. Many of whom will be put out of business due to the fact that their margins are often quite thin. In addition, those who work for or with these individuals will also lose their jobs.

Second, a transfer tax such as this will lower capital gains dollar for dollar, making the notion that anyone who invests their money will be on the hook for the excesses of Wall Street all that more poignant.

Finally, such a tax will undoubtedly affect the number of shares traded on an absolute basis, thus reducing liquidity "a necessary ingredient in the effective pricing of assets. It's the complete lack of liquidity, for example, which made collateralized mortgage obligations effectively worthless.

The body of the bill suggests that such a tax would have a negligible impact on the average investor. I beg to differ. For example, a $10,000 trade (or approximately 100 shares of stock in Apple, Inc.) would increase the cost of a round trip transaction by $50. 100 shares is generally considered to be a minimum size for a trade, which would devastate any small business executing even a handful of similar trades each day.

As you can see, while this bill may sound good on the surface, the effects, if it is passed, will reach anyone who wants to invest their money and will ruin many small business people who are not at fault for this distressing situation all Americans are struggling through.

I urge you to vote NO on H.R. 1068		Tell Congress to Block the Trader Tax

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People signing the "Tell Congress to Block the Trader Tax" petition!

  1. Sun., Feb. 7, 2010 11:22 AM    link Ed K. | Fairfield, IA

  2. Fri., Feb. 5, 2010 11:39 AM    link Andrew S. | West Frankfort, IL

  3. Fri., Feb. 5, 2010 11:35 AM    link Name not displayed | Santa Clara, CA

  4. Fri., Feb. 5, 2010 11:32 AM    link Lee W. | Durham, NC

    If the goal is to move trading off shore, make a city besides New York the financial capital of the world, and kill NYC tax revenue, this bill will achieve that goal quite well.

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  6. Fri., Feb. 5, 2010 11:24 AM    link jon n. | Chicago, IL

    This tax would push trading offshore faster than Rep DeFazio can imagine. It will hurt investing in America, & reduce the greatest capital market system ever created to a footnote in history books. A vote for 1068 is a vote for socialism and against capitalism pure and simple.

  7. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

  8. Thu., Feb. 4, 2010 11:24 AM    link Brad R. | Atlanta, GA

  9. Wed., Feb. 3, 2010 10:16 AM    link Name not displayed | Plainfield, NJ

    Designed to entice class envy and "punish the "rich," this bill will make everyone more poor: when you hinder market-makers, goods become more expensive. As with FDR, it's never been about recovery but about reform of our economy.

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  11. Mon., Feb. 1, 2010 6:55 AM    link Gary G. | Briarcliff Manor, NY

    I have been working for over two years to become a successful trader, preferring to trade my retirement account than to depend on others. Employment situation in America is desperate and I have two teenagers to send to college. I have been self-employed for nine years. Trading with low commissions I am convinced I can use my own intelligence to forge a dependable income stream. Creating a tax would destroy my hopes of a regular income. I have resorted to teaching the piano, but this income in no way is enough to take care of my family.

  12. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

  13. Sun., Jan. 31, 2010 11:29 PM    link Michael C. | Wayne, PA

  14. Sun., Jan. 31, 2010 11:27 PM    link Douglas A. W. | Park City, MT

    With the proposed tax hike of capital gains, this tax would put the small stock trader at a great disadvantage at the least, out of the market at the worst.

  15. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

  16. Sun., Jan. 31, 2010 9:33 PM    link Name not displayed | Raleigh, NC

  17. Sun., Jan. 31, 2010 3:39 PM    link Ray W. | Ruskin, FL

  18. Sun., Jan. 31, 2010 9:03 AM    link Carol A. | Tylersport, PA

  19. Sun., Jan. 31, 2010 9:01 AM    link Neil A. | Tylersport, PA

  20. Sat., Jan. 30, 2010 10:29 PM    link Roger B. | Newport, RI

  21. Sat., Jan. 30, 2010 7:47 PM    link johan p. | Bronx, NY

  22. Sat., Jan. 30, 2010 3:20 PM    link Edward N. | Austin, TX

    You let bonuses happen to the tune of $13.7 Billion this year. You need to let the people who caused this pay for it. I am not a large bank who mismanges it's assets and then gets rewarded billions for it, I am a small trader, making a living, just like my mother, my grandfather and his grandfather who were traders.

  23. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

  24. Fri., Jan. 29, 2010 11:37 PM    link Lynne L. | Jewett City, CT

    This is hard enough for the individual investor...having to pay a percentage-based transaction tax even on losing trades is adding insult to injury and could easily serve to drive many small investors out of the market.

  25. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

  26. Fri., Jan. 29, 2010 11:08 PM    link tom p. | Mercer Island, WA

    This passes and we will be coming after congress with torches and pitchforks! Enough already!

  27. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

  28. Fri., Jan. 29, 2010 8:18 PM    link Name not displayed | Austin, MN

    I am retired and I don't need more taxes on money that is shrinking in the stock market anyway without taxing trades in my mutual account that I have no control over.

  29. This comment has been reported to the site manager. It will be reviewed and removed if inappropriate. Thank you!

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