"It would seem to me that placing such a tax on financial transaction such as stock purchases and sales would quickly bring the financial markets to a grinding halt."
"Investors would simply stop, and I mean STOP as in totally and quickly, trading securities on US stock exchanges. Capital formation would CEASE, and jobs would disappear QUICKLY as investment would halt."
"Unless I'm missing something."
I'm not sure why you think this would happen.
If someone buys $100,000 worth of stock, they pay a $280 transaction fee.
They pay no other taxes of ANY kind, ever.
A family with a income of $100,000 pays $560 year in tax, as opposed to the $30,000 - $50,000 they pay now.
If, as a conservative you believe that lowering taxes INCREASES investments, then this is the ultimate expression of that idea.
Think about it. The avcrage family would pay only a few hundred dollars in taxes, federal, state, local, Social Security, Medicare, and sales tax. That's it.
So what do you think they're going to do with the thousands to tens of thousands of dollars they will now have left to spend.
"It would seem to me that placing such a tax on financial transaction such as stock purchases and sales would quickly bring the financial markets to a grinding halt."
Agreed. This would kill Wall Street, and shift most trading activity to offshore markets. A lot of trading is done for very thin spreads, as well, and just wouldn't occur (i.e. it would no longer be profitable) with this tax.
But, if anybody thinks some federal bureacrats are going to outsmart Goldman Sachs or Morgan Stanley, and manage to place the majority of the tax burden on Wall Street firms... well I'm a little dubious.
"Think about it. The avcrage family would pay only a few hundred dollars in taxes, federal, state, local, Social Security, Medicare, and sales tax. That's it."
Where is the shortfall made up? If the average family is paying only a fraction of their current tax bill, where is the revenue made up to carry to current budget responsibilities?