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Eliot Spitzer, the disgraced (your Dec. 9 commentary by him left that word out) former governor of New York, speaks glowingly of a windfall from a tax on financial transactions.
What he describes is the Holy Grail of politicians, an indirect tax on the population that is all but invisible to voters and fills government's coffers with "gobs" of no-strings-attached money.
The banks aren't going to pay it. They're just going to add it to the trading costs of their clients.
He obfuscates the issue by demonizing financial firms, but such a tax really falls on the retirement savings, life insurance policies, health and welfare funds, and school, college, charitable and philanthropic endowments of the non-government economy. It would encourage trading on foreign exchanges, depriving investors of the protection of U.S. securities laws and oversight.
A financial transaction tax would prefer direct private investment that would not be subject to a transaction tax, further distorting financial markets.
If Mr. Spitzer so abhors "high-speed trading" (and with that feeling I don't disagree), let him come up with a way to regulate it directly.
All-in-all, a financial transactions tax is a horribly bad idea, laden with unintended consequences.
One way or the other it comes out of the pockets of individual Americans.