Congressman Peter Defazio’s proposed bill, “Let Wall Street Pay for the Restoration of Main Street Act of 2009,” is getting attention for the .25% tax it would impose on trades, but it might be difficult to find legislative support for the bill beyond its five co-sponsors.
The worry among legislators is that unless a “Wall Street tax” has international support, it will drive trading activity overseas. Geithner says he has not seen a version of the bill appropriate for the U.S. and Pelosi agrees. She says a tax on transactions would need international support. John Carney has a bunch of reasons why the tax just will not work.
The upside of a tax on trades would be the yearly $150 billion it plans to raise to reduce the deficit and fund a “Job Creation Reserve.” Unfortunately, it’s not practical for the government to create any kind of fiscal reserve. In reality, all current revenues will be spent while the government places IOUs in the reserve, just like the nonexistent Social Security Trust Fund. What’s more, there’s no way for any Congress to ensure future lawmakers will use revenues to reduce the deficit.
So is there support for the bill? There are 650 comments on yesterday’s article in The Hill, and most of them are strongly against it.
Drew Rath comments: “It’s just one more ploy in the overall plan to destroy the free market US Economy. All the posts here that talk about jobs DESTRUCTION and sending them overseas are right on the mark.”