Save traders’ jobs: Do not enact a financial-transaction tax

November 24, 2009 | By: Robert A. Green, CPA

Traders, please join us by speaking out to defend your job and business from the government’s tax axe.

Kindly click the Rally Congress link below to read and sign our petition. While you are at our Rally Congress page, please also send this letter (or your own customized version) to your Congressman and distribute it to your social media (Facebook, Twitter, and LinkedIn). You can offer your comments on that page too. Please help spread the word on trader message boards and in our trader community. We need as much support as possible to win here.

Rally Congress Action Petition 

Rally Congress RSS/XML Feed 

Here’s a copy of the letter (but please don’t forget to sign the Rally Congress version):

Dear Congressman,

Please don’t pass a financial-transaction tax. It will cause my colleagues and me to lose our jobs. I understand you want to pass a financial-transaction to finance a new jobs recovery bill. That makes very little sense, because the tax would put me out of business and lead to job losses among my colleagues. Look at the number of people who have signed this petition and kindly count them as job losses. If you can table the financial-transaction tax, you can count this number as saved jobs. 

Rep. Peter DeFazio (D-Ore.) continues to support the tax as a way to pay for a jobs bill he is drafting with Rep. Ed Perlmutter (D-Colo.) titled “Let Wall Street Pay for the Restoration of Main Street Act of 2009.” They are proposing a 0.25-percent tax on the sale and purchase of financial instruments including stocks, options, derivatives, and futures. 

I’m a humble small business trader trading in an honest and legal manner to support my family. If you pass this tax and put me out of business, I have few job prospects in this economy. I understand recovery may take another year or two, and I can’t wait that long. I’m not necessarily suitable for some of the new jobs advocated by the government, such as road construction, working in windmills, and green-energy installation jobs. I am doing a good job for myself and society using my higher education, knowledge of computers and the internet, and my savings to trade the financial markets. Many traders have already used up unemployment benefits after being laid off, so if you put them out of businesses, they will have no safety net. Traders buy goods and services from Main Street and most traders live on Main Street, not Wall Street. This tax proposal will hurt existing Main Street jobs and won’t produce new ones, either. 

I’ve read that supporters view this transaction tax as a way to “make Wall Street pay.” But their logic is inaccurate: The economy’s downward spiral was caused by the real estate bubble and poor lending practices; not by traders. The stock-market recovery since March 2009 — one of the few bright spots of the economic recovery — has been helped by traders like me bidding up stocks on a daily basis. Traders provided liquidity when financial markets crashed, buying stocks when other investors panicked and sold off.

Kindly reassess the financial-transaction tax and do not include it in your jobs recovery efforts. If you believe taxes should be charged against some of those on Wall Street — big banks and institutions — please don’t lump me in that category. Why not consider a bank levy as suggested by Secretary Geithner and the IMF instead?

If you’re looking to raise taxes from Wall Street, here’s another idea. You could let the TARP banks and institutions pay bonuses to their workers in stock rather than cash. As I understand it, close to 50 percent of those bonus payments (whether in cash or stock) will go to federal, state, and city taxes, amounting to $50 billion dollars or more (rough estimates). This is a similar dollar amount you intend to raise with the financial-transaction tax. If you don’t allow the Wall Street banks to pay bonuses and they retain those profits, it won’t necessarily enhance capital and it won’t lead to higher tax revenue. Those banks have large net operating losses to soak up the profits. 

Everyone I know in the trading business will be forced out of work with the financial-transaction tax, so you won’t collect the projected tax revenue from us. If you pass this tax in the U.S. well before the rest of the world’s financial centers pass it, traders all over the globe will trade foreign markets instead of U.S. markets. In addition to running me out of business, you’ll also force my brokerage firm and the financial exchanges to lay off employees. This tax will bring many unintended consequences, including job losses on Main Street.

President Obama empowered Treasury Secretary Geithner to speak for the U.S. on the world stage at the G20 meeting in November. Secretary Geithner said he didn’t support this tax, and he is trying to coordinate the effort with the rest of the world. The IMF gave early indication it doesn’t support the tax as well, but it will present its official report in April 2010. I don’t understand why left-wing elements of the Democratic Party are still pushing hard for this tax and jumping the gun on the global effort. I thought President Obama wants to cooperate with the world and not bully it with unilateral action. 

In summary, this financial-transaction tax seems very unwise. Raising taxes on traders will kill jobs, put small companies out of business, and in the end, raise very little revenue. With these groups out of work, their tax revenue is lost. Touting this tax as a way to create jobs on the government level (short-term jobs that have no sticking power) is an incredibly shortsighted move. If you count the saved and created jobs, you’ll find you’re destroying jobs on a net basis. Please leave this analysis to people who are well trained in economics, such as Secretary Geithner. Kudos to him for handling the global stage properly on this matter. We trust he will lend his voice to President Obama and continue to speak out against a financial-transaction tax. 

Sincerely,

Robert A. Green, CPA
President, CEO 
GreenTraderTax Traders Association

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