By Gene Davis, DENVER DAILY NEWS
One political expert expects a fascinating and heated public relations battle to greet U.S. Rep. Ed Perlmutter’s bill that would tax a majority of securities exchanges.
Perlmutter, D-Colo., and U.S. Rep. Peter DeFazio, D-Ore., introduced a bill Dec. 3 that would levy a .25-percent securities transaction tax on a majority of Wall Street trades. The tax is expected to annually raise approximately $150 billion for the country.
Aaron Harber, a Denver Daily News columnist and political expert with a background in finance, expects Perlmutter’s bill to face a tremendous amount of opposition from Wall Street. Indeed, the Securities Industry and Financial Market Association (SIFMA), a lobbying group for hundreds of securities firms and banks, wasted no time in blasting the bill.
“As we’ve said before, a transaction tax on nearly all securities is the wrong policy at the wrong time,” said a statement from Kenneth E. Bentsen, Jr., SIFMA executive vice president. “While we continue to work toward economic recovery and job creation, this legislation would severely undermine that effort.”
Meanwhile, Perlmutter says that the security tax would spur economic recovery and job creation. Half of the generated tax revenue would go towards reducing the deficit, while the other half would be deposited in a Job Creation Reserve to fund the “creation of good paying jobs and put Americans back to work rebuilding our nation.”
Harber said that Perlmutter must make the case to a majority of his peers that the financial industry needs to contribute to the needs of the country if he wants the bill to succeed. He added that pointing out to taxpayers that they have committed almost $1 trillion to helping Wall Street wouldn’t hurt his bill’s chances, either.
“Perlmutter will find that Wall Street and its lobbyists and PR firms will try to turn this around and make it look like it will be anti-investment for the general public and for the country,” he said. “Perlmutter’s best argument is that given what taxpayers are doing for Wall Street and the financial world, it’s reasonable to ask Wall Street to reciprocate a little bit.”
Perlmutter did make the populace appeal argument during Thursday’s press conference. He said that with unemployment hovering around 10.2 percent and a record deficit of $1.4 trillion, it’s time for the “recovering Wall Street we bailed out to help Main Street America.”
Perlmutter’s bill would exempt tax-favored retirement accounts, education savings accounts, health savings accounts, mutual funds, and the first $100,000 of transactions annually that are not already exempted. In short, the bill is aimed at the bigger Wall Street firms, not the middle class everyday traders.
Harber said his history in the financial and technology markets makes him skeptical of how realistic it would be to exempt certain funds or transactions from the tax. He thinks it would make more sense to apply a simple tax to all of the security transactions, and that the complex exemption system could be a serious delay in the application of the tax.
“But the congressman I’m sure is concerned with the political fallout that would occur if he didn’t propose those exemptions,” he said.
SIFMA echoed Harber’s argument, saying that the legislation would be a compliance nightmare that would raise the costs for millions of mutual fund shareholders.
The United States had a transfer tax from 1914-1966. Harber believes that Perlmutter faces a tough challenge in brining that tax back. The bill stands a chance, however, if Wall Street continues to spark populist rage by paying itself lavish bonuses and not appearing grateful for the billions in bailout money they received, Harber said.
“I think it’s a fascinating issue that’s going to get really interesting,” he said.
Distributed by Colorado Capitol Reporters