Democrats Propose New Tax On Stock Trades (H.R. 1068)

The Democrats (with the exception of the tax-cutting John F. Kennedy) have the same solution to every problem that comes up: taxes, taxes and more taxes which means that they have not had an original idea since Franklin Delano Roosevelt. Pretty soon, they are going to have a tax for everything.

For example, the Commonwealth of Massachusetts is actully considering an idea which taxes motorists based on how many miles they drive on roads and highways.

In that style, eight Congressional Democrats have introduced a bill (HR 1068) that will tax transfers of stocks and other securities on the market. They claim it is a vehicle by which Wall Street will pay the taxpayer back for the $700 billion bailout monies, but a look at the bill itself will show otherwise:

SEC. 4475. TAX ON SECURITIES TRANSACTIONS. `(a) Imposition of Tax- There is hereby imposed a tax on each covered securities transaction an amount equal to the applicable percentage of the value of the security involved in such transaction. `(b) By Whom Paid- The tax imposed by this section shall be paid by the trading facility on which the transaction occurs. `(c) Applicable Percentage- For purposes of this section– `(1) IN GENERAL- The term `applicable percentage’ means the lesser of– `(A) the specified percentage, or `(B) 0.25 percent.

Did you notice the “By Whom” sub-section? These socialist Dems actually think that the trading facility is going to pay those costs out of pocket! The truth is, the trading facility will simply pass that cost on to the stock-holder in the form of higher trading fees.

When will these libs get a clue about economic reality?

Here is another example of the fantasyland that the Democrats live in. The stated objective of this bill is to “pay back” the taxpayer. But what is written in the bill, again, shows something completely different:

(8) All revenue generated by this transfer tax should be deposited in the general fund of the Treasury of the United States, scaled to meet the net cost of these bailouts, and phase out when the cost of the bailouts are repaid.

First of all, sending this money into the “general fund of the Treasury of the Untied States” means that it could get spent on anything that the government wants, and thus, does not have to be spent “paying back” the taxpayer. Knowing the Democrats, their intention was never for any such thing.

Second, the “phase out” is laughable since the Dems will never allow any tax to expire nor will they ever vote to repeal one. Plus, if they keep using this money for something other than the stated intention of this bill (i.e. to “pay back” the taxpayer) they can claim that the goal’s of this new tax have not been reached and therefore will be able to spin a reason as to why the tax must remain in place.

Further, the true culprit of the Wall Street financial crisis is the 1977 Community Re-investment Act. Before anything can be done to restore Wall Street, the CRA must be repealed.

This is nothing more than another socialist bill which the Dems want to use as a mechanism for Barack Obama’s stated objective of redistributing wealth. It must die before it serves to wreak even more havoc on our economy.

The eight Democrats are: Mr. Defazio, Mr. Welch, Ms. Sutton, Mr. Capuano, Mr. Wu, Mr. Stark, Ms. Delauro, and Ms. Edwards.

You can access the bill on-line here:

Let Wall Street Pay For Wall Street’s Bailout Act Of 2009
Library Of Congress
February 13, 2009

No Bailout For The Big Three Automakers

Most of us were pretty adamant that we did not want our tax money going to bailout failing financial institutions on Wall Street, especially since those same institutions were failing due to government regulations that forced them into bad business practices. Here we are several weeks later and it is looking like that bailout is going to go down in history as a huge, $905 billion failure.

Now, Congress is talking about bailing out the Big Three automakers, General Motors, Chrysler and Ford. I am against this bailout for essentially the same reasons as being opposed to the Wall Street bailout: bad business practices being forced upon the automakers, not by government, but by the United Auto Workers Union.

Plain and simple, because of the lunacy of the union negotiated contracts, American automakers cannot compete with foreign automakers and produce a quality car for the same low price. Thus, Detroit is in big trouble with no way out.

Investor’s Business Daily, giving credit to former Clinton Administration official Robert Riech, goes through the issues that the union brings to American automakers and why those issues prevent Detroit from competing in the world market.

Reich says that if a bailout is to be given, then the unions must be willing to give back many of their contract perks. I say that these same issues show exactly why no bailout should be given at all and the Big Three should be allowed to go into Chapter 11.

From the IBD editorial page:

[T]he companies’ poisonous contracts with the United Auto Workers union have to be torn up. The problem is that the UAW, under President Ron Gettelfinger, remains adamant: No givebacks. This is financial lunacy. Thanks in part to managerial incompetence, but mostly due to pricey union contracts, it costs American carmakers too much to build cars here; they can’t compete. When you fold in health care, pensions, hourly pay, vacations and the rest, average total compensation for a Big Three autoworker is $73.21 an hour, according to data cited by University of Michigan economist Mark Perry. Toyota, Honda and Nissan pay a still-generous $44.20 an hour in total compensation — a cost edge of nearly 40%. Is it any wonder that Ford, GM and Chrysler can’t compete? Or that, after paying their workers, they never have enough cash left to retool?

That last paragraph shows how union contracts are holding the automakers back. The automakers cannot afford to retool because they are doing things like paying laid-off workers 90% of their salaries for not working.

More:

These aren’t temporary problems. They’ve been brewing for decades, as management agreed over and over to labor deals that now financially strangle the industry. Yet, UAW’s Gettelfinger claims the weak economy is to blame for the industry’s woes. Nonsense. As blogger (and former corporate CEO) Jim Manzi notes, American carmakers in 1960 owned 90% of the U.S. auto market. This year, for the first time ever, that share slipped below 50%. Japan’s Big Three — Honda, Nissan and Toyota — make anywhere from $900 to $1,600 in pretax profit on each car they make in North America (mostly in southeastern states, with non-union contracts). America’s Big Three, by comparison, lose anywhere from $400 to $1,500. Truth is, they’re being out-hustled and out-priced in their own backyard due mainly to labor agreements that have driven up costs and become a millstone around their neck.

Chapter 11 will allow the Big Three to tear up those union contracts and start fresh. That is what is needed more than anything else.

Jack and Suzy Welch at Business Week make the case for Chapter 11 as well.

A government handout, however, isn’t the way to make that happen. Washington would impose conditions and promise strict oversight, but it simply can’t push through the kind of transformative change the industry needs. There would be too much political opposition, and regardless, the bailout sums being bandied about—$25 billion of taxpayer dollars, for starters—would only keep the Big Three heaving along, basically as they are. It’s a life-support solution, not a cure. That’s why the boards of the automakers should take the courageous step of putting their companies into bankruptcy. Some creditors might make the case for liquidation, but given the diminished worth of the automakers’ assets, that’s an unattractive scenario. Instead, creditors would most likely opt for the government stepping in as the debtor-in-possession financier supporting the reorganization. Talk about a fresh start. For more than a decade, U.S. carmakers have chipped away incrementally at massive legacy costs. But reorganization would open the doors to meaningful structural change through the renegotiation of contracts with creditors, dealers, and unions. And it would offer better odds of paying back taxpayers.

A bailout is not going to work and it certainly will not encourage the UAW to do the right thing and allow a massive reorganization of the Big Three’s management and production practices.

A majority of Americans were against the Wall Street bailout and it turns out that we were right to be opposed. But the Democrats in Congress are itching to repay the UAW and other unions for their political support during the elections, and they want to repay them with our tax dollars.

We need to send another message to Congress that this bailout is not acceptable. We need to tell Congress that the interests of the American people must take precedence over the interests of a bloated and self-serving labor union.

You can access these articles on-line here:

If No Givebacks, Then No Bailout
Investor’s Business Daily Editorials
November 17, 2008

GM: The Case Against A Bailout
Jack and Suzy Welch
Business Week
November 18, 2008