New Tax Would Have Traders Pay for TARP

Did you miss this one? I did until now, I must admit... on Friday, a horribly mis-titled piece of legislation was introduced in the United States House of Representatives: the Let Wall Street Pay for Wall Street's Bailout Act of 2009

And yes, that's the actual name (The Anti-Dog-Eat-Dog Act truly cannot be far behind).

I know, it's just an itty-bitty .25% tax on all securities transactions... what's the big deal? Well, put in real-world terms, which members of Congress are incapable of thinking in, it means a new $25 cost for every $10,000 worth of stock, bonds, mutual funds, commodities or options purchased.

Or, mutual fund shareholders: $2500 per $1 million in transactions. Fund managers make multi-million dollar trades on your behalf every day, and the new tax would take right away from your returns--wham!

Now you can see why it's so poorly named: Wall Street doesn't pay this one, YOU do.

And that's the reality of tax hikes, isn't it? Listen, all you bailout supporters: there is NO SUCH THING as a free lunch. We all end up paying for it-- except for what we borrow from the future (our kids get to pay for those).

Outraged? Don't be.

Well, ok... you can be angry IF you opposed not only the Obama stimulus plan, but also the stimulus schemes of our previous President; as inept as this young administration is turning out to be, George W. Bush should be perpetually condemned by Republicans for many fiscal transgressions-- the related one in this case being the very notion that government can stimulate an economy.

Like FDR after Hoover, in many cases Obama today is merely expanding on the nonsensical ideas of his predecessor, loathe as he may be to admit it.

Meanwhile, it remains true that, economically speaking, we have lept from the Bush frying pan into the Obama fire. Because the pieces of legislation this President will be signing will have been crafted by Nancy Pelosi and Harry Reid, we haven't begun to see the tidal wave of business- and economy-killing gems these two will undoubtedly dream up.

What's almost certainly coming is a death by 1000 cuts, as I warned about in June. And this trader's tax is just one small example.

Meanwhile, not only are NYSE issues contracting, but now your fearless leaders are going to do their darndest to be sure volume does, as well. That supposed $150 Billion figure this tax is allegedly going to raise? Dream on.

And don't expect these guys to ever learn the dynamic impact of tax cuts/hikes. Just expect a belch of painful legislation in coming months, because this new gang has a lot of catching up to do.

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