For a country that's short of cash and repelled by Wall Street greed, this proposal sounds like a winner: Tax the sale of stocks and bonds. At a penny for every $2 worth of securities, such a levy would bring in about $12 billion a year. And it would fall most heavily on the fast-buck artists who buy and sell securities for speculative gain, not long-term investment. Or so the pitch goes.
Unfortunately, even though the tax sounds small, it probably would jolt
financial markets. According to the Congressional Research Service, such a tax would drive down the price of stocks by about 9 percent. Wealthy investors would get walloped, of course, but so would the retirement plans of millions of Americans. By pushing stock prices downward, the tax also would discourage businesses from issuing new stock for start-ups and expansions.
Wall Street firms have been lobbying hard against this measure, and that's to be expected. The tax would reduce the volume of sales, cutting the commissions to brokers. But this is one case where whacking a special interest would hurt everybody.
