New House Dem Savers Tax Would Be
Equivalent to Doubling Cap Gains Tax

According to published reports in National Journal's "Congress Daily PM" (subscription only), House Democrats are set to propose the following tax increase on America's shareholder majority:

• 0.25 percent tax on the value of all stock transactions
• 0.02 percent tax on the value of all futures, swaps, and credit default swaps
• a tax on options at the rate of the underlying asset

The use of the $150 billion per year in tax revenue raised would be to:

• Spend $75 billion on what the government is currently financing through deficits
• Spend $55 billion on make-work government programs
• Spend $20 billion on unionized employee highway projects

In order to "protect" smaller investors from this tax, the first $100,000 in a taxable brokerage account would not be affected.  The tax would not apply to transactions conducted within pension plans (including 401(k) plans), all types of IRAs (including Coverdell ESAs), 529 College Savings Plans, and health savings accounts (HSAs).

Of course, this doesn't matter.  Congress would still be extracting $150 billion per year out of capital markets.  This is the equivalent of doubling the capital gains tax.  Back in 2007, there were about $900 billion in net capital gains reported on individual tax returns.  This brought in approximately $150 billion in tax revenue.  This bill would have the same revenue effect as doubling the capital gains tax.

If you don't think that will hurt your average investor, you just haven't been paying attention.

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