It’s not new, but it’s getting attention again: a proposed federal tax on every securities (stock and bond) transaction is being pushed by prominent members of Congress.
The proponents of this tax say it is intended to discourage high-frequency trading and won’t hurt the middle class. Since many, many middle class families have retirement accounts that are invested in stocks and bonds, either directly or through mutual funds, I have some questions:
Is the reinvestment of dividends inside retirement accounts going to be subject to the tax? If so, then middle class people are going to pay the tax.
Are transactions in U.S. Treasury securities going to be subject to the tax? If so, retirees who invest in those bonds will pay the tax. If not, that will skew the markets because Treasury securities will have a cost advantage.
I could think of more questions, but you get the idea. The simplistic notion that a tax on securities transactions will only hit fat cats and day traders is a lie, designed to gin up support for the tax among those who won’t think about how it will actually affect lots of people.
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