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No matter how you approach renewed calls for Congress to impose a Financial Transaction Tax (FTT), it would be a huge mistake for Main Street, consumers, taxpayers, retirees, states, and localities.
An FTT, which is a sweeping tax on financial trades of all kinds, such as trades of stocks, bonds, and derivatives, is not a new idea. In fact, the U.S. imposed an FTT from 1914 until it was repealed in 1965 by an overwhelming bipartisan vote by a Democratic Congress.
The truth is that Americans, in an overwhelmingly bipartisan fashion, are deeply concerned and opposed to proposals to re-impose an FTT. The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) recently conducted a national poll of 2,000 likely voters to understand their views on a proposed FTT. When they learned about an FTT, 63% expressed opposition, including a majority of Democrats, Independents, and Republicans. Finding such broad support among all political leanings is nearly unheard of in today’s hyper-partisan environment.
Supporters sell the FTT as a tax against Wall Street. The reality is that an FTT will penalize Main Street. The imposition of an FTT means that Americans will either have less saved for retirement, a first home or their children’s education, or they will have to extend their work years. This extra burden placed on hardworking families is not negligible. According to a 2019 CCMC report on FTTs, a typical retirement investor will end up with 8.5% less in his or her 401(k) or IRA after a lifetime of savings. In addition to making it harder for Americans to retire comfortably, an FTT would also have a chilling effect on retirement savings. In fact, our poll found that 51% of voters would be less likely to invest.
The negative consequences of an FTT extend to all Americans. After they learn about the wide array of negative impacts 49% of survey respondents expressed not just opposition but strong opposition to an FTT.
Moreover, bipartisan voters understand that an FTT does more harm than good, particularly when they consider the other policy priorities where Congress can make a difference. A majority of the voters CCMC surveyed identified the recovery from the COVID pandemic as government’s top priority. However, over 60% of those surveyed expressed concern that an FTT would undermine Americans as they recover from the impact of the COVID-19 pandemic and hurt efforts to restart the economy and bring back jobs.
The case against an FTT is clear. We now encourage U.S. policymakers to also stand in bipartisan opposition to an FTT and focus on rebuilding the U.S. economy and reviving American jobs from the effects of the pandemic.
Poll results can be found here.
For a deeper dive on Financial Transaction Taxes, read our 2019 report here.