When it comes to taxes, Germany and France are still wearing dunce caps. Under their prodding the European Commission has unveiled a plan to create a financial transaction tax: Buy or sell stocks, bonds or derivatives and you’ll pay tribute to the EU. Proponents say the cash is needed to pay for past bank bailouts and perhaps future ones.
If Paris and Berlin weren’t existing in a bubble, policymakers there would quickly realize that the securities business will move to more hospitable climates. The Barack Obama Administration told European finance ministers that such an exaction would not be imposed in the U.S. But so hungry are these policymakers that the negative consequences have sailed over their heads. Even the opposition of Britain and Sweden couldn’t stop this latest tax juggernaut.
There’s another warped idea at work here—the notion that such a levy will make securities more stable in price because it will crimp the style of in-and-out speculators. Vain politicians refuse to accept that it was their easy money, easy spending, high taxes and suffocating regulations that have made their economies as vibrant as a stagnant swamp.
If the U.S. would only repeal Sarbanes-Oxley and a new President in 2013 follow through with a stable-dollar policy and tax simplification, our nation would once again become the undisputed capital market center of the world.
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