WASHINGTON, D.C. — The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) today released a report that explores the negative impacts that reviving a financial transaction tax (FTT) in the U.S. would have on investors, taxpayers, and consumers.
The report makes clear that an FTT will not raise the revenue that supporters have promised. In fact, the Congressional Budget Office (CBO) in 2018 projected a 0.1% FTT would actually lead to a $43.9 Billion dollar loss in revenue in its first year.
“The Financial Transaction Tax is a tax on retirement and savings. This hits Main Street, not Wall Street. Presidents Kennedy and Johnson wisely repealed the tax and ushered in a new era where 50% of Americans are now invested in our capital markets,” said U.S. Chamber Center for Capital Markets Competitiveness Executive Vice President Tom Quaadman. “This tax will be felt by investors in pension plans, mutual funds, and 401(K)s. A typical retirement investor will end up with 8.5% less in his or her 401(K) or IRA after a lifetime of savings that translates to about $20,000.”
The FTT legislation is not anything new. What is clear however, is supporters of the legislation have not learned from the lessons of history. In 1914, the U.S. imposed an FTT and in 1932 it was doubled, sending the stock market to its lowest point in the Great Depression. The FTT was then repealed in 1964 because of instead of raising revenue, the FTT restricted investment to a small portion of the population and led the American capital markets to underperform.
“Advocates of an FTT haven’t learned from our past—an FTT will increase the cost of capital, decrease investment, harm businesses and Americans who are saving and investing,” said Quaadman. “The U.S. Chamber will oppose these misguided efforts.”
The report was released at a briefing on Capitol Hill that featured Professor James Angel, Ph.D., author, and associate Professor of Finance at Georgetown University, and a panel of stakeholders who provided a perspective of how an FTT would affect them and their customers, especially as it relates to retirement security.
The report is available online here.