I read the following headline on The Hill, AFL-CIO, Dems Push New Wall Street Tax, and my first reaction was...why? First, why would anyone propose this tax (during a recession no less!)? Second, why does the AFL-CIO care?
The bill's supporters answer the first question - in their way. Thea Lee, policy director at the AFL-CIO, stated:
It would have two benefits, raise a lot of revenue and discourage speculative financial activity. The big disadvantage of most taxes is that they discourage some really productive activity. This would discourage numerous financial transactions.At least she recognizes that it will discourage financial transactions, but why does she actually view this as a positive development?
Grover Norquist (say what you will about him, but he really does have some great insights) once said the biggest mistake Democrats have made in recent history was passing legislation to create tax-exempt individual retirement accounts. This reduced the financial dependency of U.S. citizens on not only government welfare programs but also labor union pensions. Realizing their "mistake," this tax is an attempt to regain some lost ground in their control over Americans' lives.
Supporters of this tax are hoping that the average American is too stupid to realize that if an investment firm is making money, the average Americans investing in their funds are making money.
From a previous post:
In 2005, 50.3% of U.S. households owned financial equities such as stock and mutual funds. This is up from 49.5% in 2002 (which may not seem like much but represents an increase of more than 4 million households). As such, taxing these large companies constitutes taxing roughly half of American households.
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