U.S. Chamber Warns Against Taxing Financial Transactions

Releases Study Showing that Proposal Would Cut Market Transactions by 50%, Hurting Investors and America's Job Creators

WASHINGTON, D.C.—The U.S. Chamber of Commerce's Center for Capital Markets Competitiveness today warned against proposals that would tax American financial transactions, releasing a study highlighting the dangers to Main Street. The Chamber also released a poll that shows that most Americans oppose taxing all stock trades and similar financial transactions, including stocks purchased by mutual funds on behalf of investors and future retirees.

"Taxing financial transactions will do nothing to create jobs. It will hurt average investors, reduce savings, and make it harder for America's job creators to recover from the economic crisis." said David Hirschmann, president and CEO of the Chamber's Center for Capital Markets Competitiveness. "Today's highly liquid markets make it possible for average investors to get the best price and pay dramatically lower transactions costs when they buy and sell stocks. And, with more investment, they fuel the capital needs of businesses of every size."

The study, Examining the Main Street Benefits of our Modern Financial Markets, was conducted by Charles Jones, the Robert W. Lear Professor of Finance and Economics at Columbia Business School, and Erik Sirri, a Professor of Finance at Babson College and former director of the SEC Division of Trading and Markets.

The study describes how the growth and sophistication of U.S. modern financial markets make markets fairer and more efficient. They have expanded investment opportunities for individuals and retirees and improved access to capital for U.S. businesses. It also examines how a significant change such as a financial transactions tax can not only harm Wall Street, but Main Street. The proposed tax would likely more than double the cost of transactions and send trading back to the levels of the 1980s. The study shows that cutting liquidity would increase volatility, make our markets less competitive, and reduce the investment and retirement savings of all Americans.

"This is a big step in the wrong direction for an economy trying to regain strength and jumpstart job growth," Hirschmann stated. "This proposal would starve cash-strapped companies and cripple our efficient, transparent, and liquid markets. The good news is that a majority of Americans agree that it's a bad idea."

According to an independent poll of 800 U.S. registered voters by Lombardo Consulting Group from March 10, 2010, 70% of respondents said that they opposed or strongly opposed a tax on stock trades and similar transactions, with 61% of respondents agreeing that new taxes on banks and other financial institutions would "just do more damage to the economy."

The Chamber has been calling for comprehensive regulatory reform since well before the financial crisis and supports effective and forward-looking reform that will restore certainty and confidence to the marketplace.

Since its inception three years ago, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.

The U.S. Chamber of Commerce is the world's largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

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