Night of the living tax: It's time to bury Ellison’s Inclusive Prosperity Act
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In case you missed it, last Friday afternoon, before a three-day weekend, Rep. Keith Ellison (D-Minn.) reintroduced his plan for a financial transaction tax on every stock, bond and derivatives trade in the country.

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It was the third introduction / reintroduction of the bill, despite previous stalls, and came pre-packaged with support from a nurses’ union, continuing its familiar role as a gesture of solidarity with working-class Americans demanding Wall Street “pay its fair share.” 

 

However, the effort seemed especially hasty this time around, with many errors. And it left still unanswered the haunting question of just how implementing a tax that hits pension funds is getting Wall Street to pay its fair share.

I understand the urgency to solidify union support in the run-up to this week’s vote that could realize Ellison’s aspirations to become the chairperson of the Democratic National Committee. But the reintroduction was jarringly sloppy. 

For example, the original release cited 175 co-sponsors of his bill; a corrected version adjusts the number to 17. And the release assures readers “Eleven nations in the European Union (EU) will implement one soon.” This despite news the morning before this release that the European support of the tax had long dwindled to just 10 nations and, of those, two were wavering because of the damage the tax would inflict on pension funds.

It is no surprise that pension funds are the tip of the spear against a financial transaction tax in Europe. It appears from news accounts that the EU talks about the tax have been resisted by countries like Belgium, which steadfastly refuse to compromise their country’s obligation to uphold the “safeguarding of pension funds.” It is probably a matter of time before such a realization creates anti-financial transaction tax activism here.

Consider the consequences.

The Pew Charitable Trusts reports that the nation’s state-run retirement systems collectively have a nearly $1 trillion — yes, trillion with a “T” — shortfall. That difference has to be made up by local taxpayers to honor pension commitments. Take the California Public Employees’ Retirement System (CalPERS) retirees in the tiny town of Loyalton, for example: Residents there covered under the giant fund had their pensions slashed by more than half when the municipal fee to fund shortfalls exceeded the town’s entire annual budget.

Despite who supporters think they are targeting with this tax, the not-so-collateral damage will be a reduction in our ability to keep pension promises to our hard-working union members. European press call its financial transaction tax a zombie tax. Here in the U.S., let’s call it what it is: a tax on retirement that needs to be buried once and for all.

 

Bill Harts is CEO of Modern Markets Initiative, education and advocacy in support of the proven benefits of high frequency trading in market structure.


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