There is a bill under consideration right now called "Let Wall Street Pay for Wall Street's Bailout Act of 2009" that is utterly misguided and will harm the United States. Here is why.
The bill proposes a tax on securities transactions of 0.25%. If you are selling a stock to cut your losses this will guarantee another 0.25% loss on top of everything you already lost. If you are buying a stock expecting it to go up 0.25% so you can make some money this tax deprives you of that opportunity. If you hold mutual funds in your 401k this tax will further diminish your earnings potential. You are already paying for TARP through your income taxes. This tax adds a yet another layer of taxes to force you to pay for the misguided bailout.
The end result will be a complete lack of liquidity in the only markets that are currently operational -- equities and equity derivatives. If you think the current state of affairs is bad, consider what would happen when 90% of the activity on the stock market seizes. That alone should be enough of a reason not to support this bill.
A significant decline in the stock market activity will pull the rug from under smaller Wall St. firms that had nothing to do with the current crisis. It will threaten the livelihoods of many of us who work for high-frequency trading and market making firms.
I've written to my congressman and expressed my opposition to this bill
OpenCongress - U.S. Congress - H.R.1068 Let Wall Street Pay for Wall Street’s Bailout Act of 2009.
To amend the Internal Revenue Code of 1986 to impose a tax on certain securities transactions to the extent required to recoup the net cost of the Troubled Asset Relief Program.
