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Taxing Wall St. would help jobs, deficit

Wall Street's "Charging Bull" statue

TEXT OF INTERVIEW

Steve Chiotakis: Wall Street's taken a lot of rotten tomatoes lately for its role in the economic meltdown and for the bailouts and the bonuses. So it's no surprise that a group of lawmakers in Congress -- mainly liberal ones -- want to stick it to Wall Street to get some more money in the coffers to fund job growth and deficit reduction.

Marketplace's John Dimsdale is with us live this morning from our Washington Bureau. Good morning, John.

John Dimsdale: Good morning, Steve.

Chiotakis: So what do these Congressman have in mind?

Dimsdale: Well, the title of this draft bill pretty much says it all. It's called the "Let Wall Street Pay for the Restoration of Main Street Act of 2009." The idea is to tax stock trading -- options, futures, derivatives, trading, all of it. Supports say a quarter of a percentage point tax on trades would raise $150 billion a year for job programs and deficit reduction.

Chiotakis: So what kind of reaction is this getting?

Dimsdale: Well, there's a lot of concern that taxing trades would be a job killer, not a job creator, that discouraging stock trades would choke off productive investments. Columbia Business School Professor John Coffee says it would be a blow to big investment banks:

John Coffee: There is a certain inconsistency in bailing out these companies to save the economy and then turning around and taxing punitively their principle source of revenues.

Chiotakis: Hey John, how about in Congress? I mean, is this bill going to go anywhere?

Dimsdale: Well it's certainly not getting any support from lawmakers from New York or Chicago, because they worry that the trading business will just go overseas. So it really isn't moving much and probably won't this year.

Chiotakis: All right. Marketplace's John Dismdale, live with us from Washington. John, thanks.

Dimsdale: Thanks.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.
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I think that they need to do something to discourage short-term horse trading and encourage long-term investment that capitalizes economic growth.

I don't think this is such a bad idea. The people who will be get the hardest are the quantitative trading funds, hedge funds and derivatives traders who do lots of frequent short-term trading. They're not doing very mcuh for the economy. They're basically diverting capital and skimming the markets like a casino.

I think if done right, this could be a good idea. I say that as an investor who buys stocks.

This tax will hit main street more badly than Wall Street. We will be taxed 4 times on our retirement savings: when we earn the money, when we buy stocks, when we sell them and finally one more time on capital gains.
Like most people, I don't have a guaranteed pension (just a 401K) and social security will be probably be bankrupt when I retire so my stocks investments are my only retirement savings. I guess we will all have to get a union job or work for the government if we want to retire.

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