Tax Stock Trades

Reps. Peter Defazio (D-OR) and Ed Perlmutter (D-CO) are proposing a 0.25 percent tax, or $0.10 per share tax, on the sale and purchase of financial instruments such as stocks, options, derivatives, and futures. The real problem is that the tax would effectively end U.S. dominance of financial markets.

We live in a highly competitive financial world where initial public offerings (IPOs) migrate to London when the process becomes prohibitively expensive or lengthy here. Do you really think this tax wouldn't drive trading to a location that was less expensive to transact business? Major U.S. financial institutions are already planning. The NYSE, EuroNext, OMX, and CME all have developed relationships in areas outside the jurisdictional reach of the U.S. Congress. If it means $50billion to $200 billion per year in cost differential between staying put or going overseas, do you think that the exchanges will sit by as their business is stolen offshore?

If this bill is approved, Congressmen Defazio and Perlutter will not be adding to our economy, but instead will be killing jobs and tax revenues. Can you say unintended consequences?