Just moments ago, I received this letter from Senator John Cornyn in reference to H.R. 1068, "the traders tax".
Kipp
Dear Mr. Cohen:
Thank you for your recent letter regarding the Let Wall Street Pay for Wall Street’s Bailout Act of 2009 (H.R. 1068). I appreciate having the benefit of your comments on this important matter.
As you know, H.R. 1068 was introduced in the House of Representatives on February 13, 2009. This legislation would impose up to a 0.25 percent tax on financial transactions, including the sale and purchase of stocks, options and futures. While it is imperative that all parties associated with the current financial crisis are aggressively investigated and that any corporate executives found to be involved in criminal activities are swiftly prosecuted, H.R. 1068 would punish all investors with higher taxes. This is the wrong approach to stimulating our economy and would serve only to further impair our efforts to strengthen our capital market and create jobs here at home. H.R. 1068 was referred to the House Committee on Ways and Means for further consideration. Although no similar legislation has been introduced in the Senate, you may be certain that I will keep your views in mind should H.R. 1068 or other relevant legislation be considered by the full Senate during the 111th Congress.
I appreciate having the opportunity to represent the interests of Texans in the United States Senate. Thank you for taking the time to contact me.
Sincerely,
JOHN CORNYN
United States Senator
517 Hart Senate Office Building
Washington, DC 20510
Tel: (202) 224-2934
Fax: (202) 228-2856
http://www.cornyn.senate.gov
I would like to thank Jack S. for sharing this letter that he received from his Senator!
Subject: A message from the office of Congressman Joe Sestak
Thank you for writing to me about H.R. 1068, the Let Wall Street Pay for Wall Street's Bailout Act of 2009. I greatly appreciate your input on this matter, and I apologize for the delay in my reply.
As a Member of Congress, it is my responsibility to represent my constituents' concerns and interests and to provide them the honorable and enthusiastic service they deserve. I truly value your thoughts and suggestions on issues before the House. In a representative government such as ours, it is essential that I know what your views are on these issues.
Like you, I am concerned about the state and future of our economy, and the current and long term affects on all American families. A strong economy is the backbone of our healthcare, education, and national security. As you may know, recent economic data confirm that we are in an economic recession, and have been for some time. The combination of declining real income, coupled with rising unemployment, high energy costs, the housing crisis, and skyrocketing healthcare prices is devastating our hard-working middle class. I think that stimulating economic growth is a priority for our country and I support tax policies that benefit hard-working Americans and provide more opportunities for their success. I firmly believe that tax policies should help those who need it most, and I have worked hard to do so.
As you may know, H.R. 1068 calls for a tax on any securities transaction to be paid by the trading facility conducting the transaction. The tax rate to be imposed would be the lesser of 0.25 percent or a specified amount as determined by the Secretary of the Treasury. This transaction tax would apply to all securities transactions, including commodities and futures trading.
I do not support H.R. 1068 because I believe imposing a transaction tax on all securities transaction will not support our current efforts to stimulate an economic recovery, and also because this tax will have negative affects far beyond the Wall Street financial institutions who have received government funding. Last October, I voted for, and the House passed by a 263-171 vote, the Emergency Economic Stabilization Act of 2008 (HR 1424). The President immediately signed the bill into law. One of the primary objectives of this law was to provide liquidity and confidence to financial markets. Provisions in the law were included to protect the interests of American taxpayers from an impact on the economy, their jobs, personal savings and pensions.
Imposing a transaction tax such as the one called for in H.R. 1068 could have the positive effect of limiting speculative derivatives and futures trading; however, it could also have a dramatic impact on overall trade volume for all securities. This could results in even more downward pressure on stock prices, which are already in steep decline due to the current economic recession. Promoting liquidity and confidence in financial markets is essential to the economic recovery efforts. Additionally, according to the Congressional Research Service, imposing a transaction tax in the financial markets could possibly cause a significant loss of trading volume to competing overseas markets. As a result of a transaction tax, trading activity might flee the U.S. in favor of other sites. Furthermore, attracting back once-lost activity may be extremely difficult after alternative trading sites emerge.
Additionally, I do not support this legislation because the added cost imposed on trading institutions from this tax could be passed on to the individual customer. Since this tax applies to all traded stocks and commodities, and institution involve in these markets would have to account for this added expense. Many small businesses involved in securities trading would not be able to absorb this added expense, and would be forced to accept lower profit margins, or pass the added expense imposed by this tax on to the customer. The end result could be a tax on small businesses, and American families who invest in our markets, neither of which were directly involved in causing the Wall Street financial crisis, or recipients of government funds from the Troubled Asset Relief Program (TARP).
Thank you again for your letter. If I can be of any additional assistance, please do not hesitate to contact me. I look forward to our future correspondence.
