Bernie Sanders posted a strongly worded tweet on Friday, promoting student debt forgiveness by instituting a tax on Wall Street transactions:
“We’re going to cancel every penny of student debt, and we’re going to pay for it with a modest tax on Wall Street,” the Socialist senator and presidential candidate wrote. “Wall Street doesn’t like that, but to hell with Wall Street.”
But many weren’t buying it, including Congressman Dan Crenshaw.
Crenshaw, R-Texas, a former Navy Seal who lost his eye lost to an IED in Afghanistan (and was famously mocked by Saturday Night Live for his eyepatch) retweeted Sanders’ post with the following comment:
“Another word for ‘Wall Street’ is ‘pension’, ‘401k’, and the mutual funds that regular Americans put their savings into. Stop trying to pull a fast one on us.”
The proposal to which Sanders referred, The Inclusive Prosperity Act of 2019, would impose a tax of a fraction of a percent on trades of stocks, bonds, and derivatives.
“This Wall Street speculation fee, also known as a financial transaction tax, will raise substantial revenue from wealthy investors that can be used to make public colleges and universities tuition-free and substantially reduce student debt,” according to its description on Sanders’ Senate website. “It will also reduce speculation and high-frequency trading that is destabilizing financial markets.”
This bill supposedly targets Wall Street investment houses, hedge funds, and other “speculators.”
“For the rare household of modest means that trades directly or through a broker, this legislation would provide an income tax credit to fully offset the speculation fee,” it adds.
But Crenshaw’s comment echoed criticism from the financial services industry over various transaction tax proposals, with advocacy organizations arguing that any tax would be passed onto participants, negatively impacting retirement saving accumulation rates and account balances.
Brian Graff, Chief Executive Officer of the American Retirement Association, has previously warned of its potential danger.
“Proponents say it will reduce costs and volatility in the markets, so it’s a liberal unicorn! It’s also supposed to go after Wall Street fat cats, but who does it really affect? American workers,” he claimed at last year’s NAPA 401(k) Summit, before noting one predicted result is a 20 basis-point increase in the cost of the average target-date fund.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
