First draft of my letter and blog. To give to my editor now. Please make suggestions. My editor will edit it down to size. RallyCongress.com letter to Congressman. Re: Stop the financial-transaction tax threat from landing in the U.S. Dear Honorable Congressman: As Congress and the administration consider all types of tax revenues for solving the fiscal cliff, please donât be tempted into considering a financial-transaction tax (FTT). Obama said no FTT: President Obama promised he would not raise taxes on the American middle class and poor, and thatâs exactly what FTT does. FTT is a shot-gun approach thatâs principally paid by the users of our financial markets. That includes all investors, retirees, charitable foundations which help the poor, and university endowments which provide scholarships and financial aid to students. If you collect a defined-benefit pension arranged by a public-sector or private-section union or otherwise, itâs important to note that most pension funds are significantly underfunded, and those funds will never catch up to where they need to be to pay retirees if a FTT is allowed to decimate their portfolios. Taxpayers will have to make up the difference. For these very reasons, President Obama and Secretary Geithner denounced FTT many times at the G-8 and G-20. President Obama has a better approach on taxing banks in his annual budget - a âfinancial crisis responsibility feeâ only charged to big banks on their liabilities (risk capital). President Obama expressed displeasure with Rep. Peter DeFazio for continuing to push his FTT bills in Congress, with little sponsorship. Tax hikes on the rich: Congress is focused on raising tax revenue from the rich, but not from the middle class and poor. The Affordable Care Act starts a new Medicare 3.8% tax on Jan. 1, 2013 on upper-income peopleâs unearned income, principally investment income. With Bush-era tax rates expiring on the upper-income at year end, capital gains and dividend tax rates on the rich are headed higher, too. The rich are already being tapped for tax hikes on their investments. Bottom line. Tax banks directly if you like and target the upper-income if you think thatâs fair, but itâs unfair to raise taxes on middle class investors, retirees, charities, and university endowment funds. Donât buck President Obama on this. President Obama needs your help: Say no to FTT bills entered in Congress from Rep. Keith Ellison (D-Minn), Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-Iowa). Congressional leaders dismissed pro-FTT bills to date, not showing them the light of day in Congress. But, in the fog of war to negotiate the fiscal cliff deal before year end, FTT advocates are trying to sneak FTT back on the table. Advocates argue FTT is a tiny tax, but it huge â it puts market makers and traders out of business overnight, which creates conditions for new flash crashes. Investors lose a significant portion of their portfolio capital over time and it rebalances their risk premium, further dampening investment. Donât let France and the EU tax Americans with their FTT, either: France adopted a FTT recently and they just expanded it to include American Depository Receipts (ADRs) of French equities trading on U.S. exchanges. If left unchecked, if Americans buy and sell French ADRs on U.S. exchanges or globally, the exchange is supposed to withhold FTT excise taxes from every buy and sale transaction, and remit that tax revenue to the government of France. While President Obama hopefully can keep his pledge to protect middle class Americans from tax hikes, without further tools from Congress, he will be unable to block the French tax assault on Americaâs middle class. This reminds me of the British slapping Americans with stamp duty taxes which led to the American Revolution. Congress must fix this fast! Rep. Tom Priceâs new block-French FTT bill: Please support Rep. Tom Priceâs bill entered on Nov. 30, 2012 to enable the U.S. Treasury to block this French tax attack in America. Itâs a slap in the face of the (French-gifted) Statue of Liberty. Visit http://tomprice.house.gov/press-release/price-introduces-bill-opposing-financial-transaction-tax. Get ready for Germany bringing out the big guns for exploding EU FTT in the U.S. and using it to force the UK to their knees: France and Germany strong armed 9 other EU members to adopt a similar FTT plan. After the UK, Sweden and several other EU members said no, they used the EUâs minority-approach âenhanced cooperationâ (EC) procedure. The crucial upcoming QMV (Qualified Majority Voting) round of EC can defeat FTT EC-11, and that vote is extremely close. The UK and Sweden are vehemently against this EU FTT since it mostly falls on investors using Londonâs dominant exchanges. If the UK is very against EU FTT, the U.S. should be too, since the U.S. also has the worldâs largest financial exchanges channeling investors from around the world, and stands to lose the most. Are you in Congress ready to allow the U.S. to become a minor player in financial services and cede financial industry jobs, payroll and income taxes to Asia on your watch? Sweden tried a FTT in the early 1990s and it decimated Swedish and Finnish banks overnight, with financial transactions, along with banks and jobs fleeing to London. While Paris and Berlin may be willing to take this gamble as part of their effort to federalize the EU, London, New York and Chicago canât afford this great risk. We have different interests to protect. Germany may slow this down to 2016, but France is pushing ahead and attacking the U.S. with this tax now. Rep. Price says in his press release: âPaying taxes to other countries is a bad idea â and we need a law to stop it! This financial transaction tax would harm small businesses and investors while damaging American entrepreneursâ ability to compete in a competitive global environment,â said Congressman Price. âFrance and other European Union nations want to charge more taxes on financial transactions, ignoring the fact that small investors will be forced out of capital markets. This move would impede financial markets efficiency, decrease liquidity, distort and discriminate within markets, and raise costs all at a time when what our economy desperately needs is more private capital investment in growth and job creation. I urge my colleagues to act on behalf of American entrepreneurs, investors and job creators by joining this effort to preempt the imposition of any form of a financial transaction tax on American markets.â More information: To learn why a diverse group of people from many different backgrounds opposes the FTT, please read âStraight talk about the FTTâ at:www.financialtransactiontaxes.com . (Includes over 40 references with research from experts around the world.) Here is one of their memberâs letter addressed to Congress. I am OPPOSED to the pending Financial Transaction Tax legislation (also known as the âFTT,â âTobin Taxâ or âRobin Hood Taxâ). It's not a tax on Wall Street â Itâs a tax on Main Street. ⢠The Secretary General of the European Federation for Retirement Provision says the FTT is not a tax on Wall Street, but rather a tax on retirement savings and other âinnocent bystanders.â ⢠A study by the Dutch Central Bank showed that over 40% of the FTT would be paid by pensions and retirement savings ⢠James Tobinâs co-author, Berkeley Professor Barry Eichengreen, says the Tobin tax is the âwrong toolâ to raise revenues. ⢠A study by the World Bank concluded that â⦠neither the tax revenues nor the efficiency gains hoped for⦠are likely to materialize.â ⢠The IMF showed that the best way to hold banks responsible is to tax them directly because the FTT tax burden would âfall largely on final consumers,â not the financial sector. â¢Most empirical evidence shows that higher transactions costs are actually associated with more, rather than less, volatility." Conclusion: The goal of tax discussions is to raise revenue in a productive and fair fashion. FTT fails this test. FTT falls on the middle class, and the rich can navigate around it using markets where they donât charge FTT. President Obama, Speaker Boehner and the other leaders of Congress have enough on their plate for discussion of the fiscal cliff. Itâs a bad idea to throw a major monkey wrench like FTT into the mix, after President Obama and the other leaders already took FTT off the table. We canât negotiate backwards. FTT is counter-productive. Whatever FTT revenues are raised are more than offset by lost tax revenues related to job losses (payroll and income taxes), capital losses rather than capital gains taxes, and net operating loss tax refunds rather than business income taxes. In the end, FTT is a punitive attack against financial-free-market capitalism. Why play politics and seek revenge, when we have an economy to fix together, jobs to create, and taxes to be raised?
Comment. I am writing this letter to Democrats. No sense appealing to Republicans, they are already on our side. I don't mention or insult progressives, it's obvious. Why not pin our tail on the winner Obama who is on our side here? Rep. Price also is appealing to the middle with his recent difference with Boehner on taxing the rich. Let's make this American middle class versus the French tax attack and get some patriotism out of it.
Idealy, any letters suggested here should be messaged to every user of this forum by admin. There aremany who do not read this thread.
I recall there was a recent post about volumes in France being down post-FTT. Is there any linkage between that and this desire to tax ADRs? Trying to make a bad idea look good? I would not put it in if it is baseless because unfounded arguments weaken our case, but if there is a connection it might be worth highlighting. Perhaps just posing the question about a possible connection?
Was just thinking the same, to buttress with proof of FTT disappointment and trouble in France. Plus, ETrade and TDA shutting down in the EU. Not sure either have enough evidence or causality. Keep the comments coming for my next round of changes, thanks.
Perhaps someone familiar with the French situation could weigh in. Re TDA I would leave that out. The decision to close operations in various jurisdictions is a business decision post-takeover of TOS. I believe they are closing Australian accounts. I emailed them asking if they would accept my account (I am Thailand based) and they replied that they no longer accept accounts in various jurisdictions and Thailand is one of them. I believe HK too. No idea about ETrade.
Do you think now is the time to bring up the FTT to congressmen (even in an anti-FTT letter) at a time when congress is looking for revenue? Why bring it up to them? It's like putting a steak in front of a hungry dog.
See your good point, thanks. But, Ellison, DeFazio, Harkin and Price are bringing it up already and every lobbyist is protecting their turf in Washington this week. We should too, as few others fight against FTT.