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AFL-CIO lends support to a dreaded financial-transaction tax. Green counters.

GreenTraderTax | Thu, 09/03/2009 - 1:49pm |  Add a comment

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The AFL-CIO — the U.S.’s largest labor union — has been very bold on the national stage lately. An Aug. 30 news story http://thehill.com/homenews/house/56789-afl-cio-dems-push-new-wall-street-tax highlighted its support of a financial-transaction tax; in addition, it recently insisted that President Obama should maintain the public option on health-care reform.

Rep. Peter DeFazio (D-Ore.) chairs the infrastructure (roads, bridges, and tunnels) committee and is also the main sponsor of the financial-transaction tax. The tax proposal indicates some of the profits from the tax will go toward infrastructure. Shouldn’t funding for roads and bridges come from the users who cause the damage, including transportation and manufacturing workers (many of whom are members of the AFL-CIO)? Taxing traders for infrastructure doesn’t make sense.

TARP bills contained the only semi-valid (but still incorrect) statement for justifying a financial-transaction tax. Bill sponsors argued traders and banks caused the financial crisis, therefore they should pay for the $700 billion TARP bailout, unless TARP is paid back first. TARP is being paid back with full interest and profit, so under this reasoning, there is no need for this tax. Traders didn’t cause the mortgage crisis which led to the financial crisis. This crisis was caused by home buyers, mortgage lenders, CDO packagers and rating agencies. Thanks to trading profits and low interest rates, banks are in the process of paying back TARP loans and capital.

The AFL-CIO is leading the charge, begging the question: Is this financial-transaction tax a form of taxation or extortion? The AFL-CIO has already weakened our countries’ industries beyond restoration through organizational dysfunction.

If unions fail in America, we will survive. Conversely, if traders fail en masse, it could have a deep and lasting impact on our economy. Traders provide liquidity, a crucial element of financial markets. If the trading population diminishes, liquidity will lessen dramatically and market bubbles are more likely. Existing traders will trade less frequently and take on more risk. This market environment would increase bid/ask spreads, causing worse prices for all. Also, if no one is trading, the government won’t profit from a financial-transaction tax.

Trading is a legal means for making an admirable living. In fact, fast trading profits on Wall Street saved our economy from a market panic and depression, which could have crushed our financial system. Naming traders the villain makes no sense on every level conceivable. Traders already pay high taxes on trading profits. This transaction-based tax also taxes losing traders, which could put them out of business. This is un-American, unethical and illogical. This tax has been shot down by leadership on each prior attempt and it should be shot down again.

This tax is dangerous and it should be stopped, but what can the average trader do to stop it? Keep writing letters and emails to your Congressman http://www.rallycongress.com and join our Traders Association for a more coordinated effort. http://www.greencompany.com/Association/AssociationGTTAllianceForTraders.shtml .

For all the recent news on the financial-transaction tax, just Google that term and many good links come up with all the latest news. Read our articles on the subject here http://www.greencompany.com/Association/AssociationFinancialTransTax.shtml .

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