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AFL-CIO's Tax on Your 401(k)
This information originally appeared at www.americanshareholders.org
The Hill is reporting that “The nation’s largest labor union and some allied Democrats are pushing a new tax that would hit big investment firms such as Goldman Sachs.” Specifically, they are suggesting a tax on every stock trade, which could end up taking between $50 and $100 billion a year.
The article puts it well: Congress “would like to take a bite out of Goldman’s profits.” The current Congress has found one more clever way to punish success—a tax on those who have invested in the stock market: America’s future. Congress would do well to learn that the following things are not evil: successful companies, shareholders, and profits.
This is a tax on your 401(k). Every shareholder (including owners of mutual funds) will be paying a tax for trying to invest money back into the economy. That is, instead of rewarding those who decide to save (and who, therefore, decide to invest in America’s future through the stock market) we are punishing them. The cost of this tax will directly lower the returns on your 401(k).
Now, the article also goes on to say that there are good reasons for this: it will prevent financial speculation. There is, of course, a simpler free-market solution: don’t subsidize speculators’ mistakes with ridiculous bailouts. If people make foolish decisions, allow them to learn from them. Let people gamble if they want to. When they lose, they—with any luck—will stop gambling. And if they don’t, they are only losing their own money.
The article also goes to show the brilliance of the economic minds in government today: “There is also a growing realization among Obama administration officials and lawmakers that tax increases may be necessary to curb the ballooning federal deficit.” The government has been increasing spending without thinking of the consequences, and now, instead of cutting programs to balance the budget, they are finding new, creative ways to take our money. The way to balance the budget is to stop spending.
Congress ought to spend its innovative powers on limiting government and making it run more efficiently—not on finding new ways to take our money.