Friday, February 20, 2009

My Letter to Steny Hoyer about H.R. 1068, the "Let Wall Street Pay for Wall Street’s Bailout Act of 2009"

Below, you will find the text of the letter I just e-mailed to Steny Hoyer, the Democratic congressman from the Fifth Congressional District of Maryland. It is unedited. Amazingly, I managed not to curse. I will be following this up with phone calls.

If you haven't heard, H.R. 1068 can also be known as the "Let Wall Street Pay for Wall Street's Bailout Act of 2009". Of course, this legislation, like all the crap coming out of DC these days, lands squarely on regular investors like you and me. These fuckwits really deserve a bullet for their intentional destruction of this once great nation. And if this is how Oregon's congressman likes to treat investors and traders, that state should fall into the Pacific Ocean along with California. What a bunch of losers!

I don't normally talk about politics here because I honestly could care less about the subject. It's all legal crime and evidence of how Americans are handing over their Constitutional freedoms to the cock knocker with the best sob story. However, this horrible excuse for legislation will affect everyone, myself included, who hasn't yet escaped from this sinking ship of a nation. This legislation needs to be murdered outright, not modified, not amended, but simply killed. It is terrible for anyone who owns, or would own, any kind of security. And we all know that once a tax is levied, the government has no incentive to get rid of the revenue. (It took 108 years to PARTIALLY kill the Federal telephone excise tax which was originally levied to pay for the Spanish-American War!) Item 8 under Section 2 is a blatant lie!

Anyway, I hope you enjoy. Without further ado...

Representative Hoyer,

I am writing to lodge an official complaint about, and to implore you to do ANYTHING and EVERYTHING in your power to kill H.R. 1068., also known as the "Let Wall Street Pay for Wall Street’s Bailout Act of 2009".

As you must be well aware, the first rule of taxes is "whatever you want less of, tax". I'm sure higher cigarette taxes discourage casual smokers from engaging in an activity that is harmful to themselves. The hardcore, committed smokers are willing to trade the tax money for their fix. The government collects tax revenue on that transaction. But I would posit that much smoking has been ended or prevented due to the increase in cost associated with taxes on cigarettes. Probably way more success has been had by increasing the economic cost of smoking than by highlighting the physical damage done by smoking.

Clearly, by proffering such an absurd piece of legislation, your colleague Rep. Peter DeFazio [D-OR] seeks to discourage securities trading and investing in the United States. I'm sure there are other countries, other stock/options/commodities/futures exchanges outside of the United States which would proudly take up that business, since you and your colleagues seem so interested in giving it away. So please tell me, is killing the trading of securities what you and the Democratic Party want for this country? This is "change that disgusts me", quite honestly.

First, I am a small trader. I already pay significant commissions through my broker, and short term capital gains taxes on my trading earnings. Fine. Imposing a 0.25% tax on sales and purchases would greatly reduce my ability to conduct my business of trading. In fact, it would actively DISCOURAGE me from this activity. I know I am not alone, and many small traders would either stop trading or seek ways to avoid owning the tax to the US Federal Government at all.

Second, this act would DECREASE market liquidity. If buyers and sellers are DECREASED in number, prices of securities will reflect that by going DOWN. You and any other congressional representatives who vote for this act will be contributing to the death of American stock markets. Prices will fall, buyers will strike, and sellers will spend more time and effort seeking to devise clever ways around paying in order to exit a losing position. How are any of these desirable? Liquidity will move to other exchanges around the world. Private companies will have less motivation to become publicly traded.

Taxing transactions will, by definition, reduce the number of transactions. That means less commission revenue for broker/dealers, clearing and settlement companies, administrators, and others in the financial ecosystem. It will also create market distortions by increasing the bid/asked spread on securities and creating more arbitrage opportunities for the savviest and fastest entities. Basically, this act, if signed into law, will force small players out of the market, decrease liquidity and price discovery, and hand more advantage to large players who can exploit the information available. Instead of democratizing investing and trading, it will further stratify that world, handing even more advantage to the already privileged and powerful.

Third, if this tax is imposed, and as I read the current legislation, it will be assessed against transactions of all sorts, including against securities held in retirement accounts. This would violate the existing tax provisions on tax deferred accounts such as 401(k), IRA/Roth IRA and other retirement accounts. That is how the current legislation is worded - very broadly. Do the Congress and the President want to increase taxes on already battered retirement funds? Wouldn't that DIS-INCENTIVIZE saving? Is that something the Congress, the Democratic Party, and the President want to do - reduce long term savings, especially retirement saving, by individuals? What about Rep. Donna Edwards [D-MD].

Fourth, I voted Democratic in the past election. The Democratic Party is clearly showing why it neither deserves nor wants my support. If this act becomes law, I will do my best to prevent Democrats from ever serving in economically important roles within local, state or Federal government ever again, because clearly you, Rep. Edwards, and the party you both represent are our ENEMIES - enemies of the people you say you are serving, enemies of the citizens of this once great country.

Finally, let me say that this incident is making me very clear where Rep. DeFazio's, Rep. Edwards' and your interests lie, and it is not with people like me. Should the "Let Wall Street Pay for Wall Street’s Bailout Act of 2009" pass into law, another personal mission of mine will become to prevent you and your cohorts from ever "serving" US - we, the people - ever again.

P.S.: Do your pensions get assessed this tax? I'm sure you'll find some way to make sure your absurdly large pensions will be privileged and protected to, won't they? How is Congress any different from Wall Street, with similarly large golden parachutes? You make me sick!

9 comments:

Anonymous said...

I could not agree with this blogger more. The crazy congress has never seen a tax they do not like. If this tax goes through liquidity will dry up and many investors will open up offshore accounts to avoid the taxes. What are these people thinking. Vote the bums out.

Dave M. said...

First time to your blog and I would like to know if I may use parts of your letter to send to my own representative re HR 1068. This should be an important issue to small traders like me (and you) and hopefully, some backlash and pressure can be generated to stop this bill from passing. Personally though, I think less anger and more pointing out the realities of what this would do to the "average trader/investor" should be utilized. But that's just a personal preference. Also, do you know if there are any trader groups/blogs or whatever that have been formed to mobilize letter and/or e-mail writing to congress people (especially Ways and Means committee members) to educate them as to what this bill would do? I really think that most members of congress will believe that this bill would affect only the big trading outfits and have little effect on the average guy (or gal). We can't afford to sit on our hands and allow this to pass without some sort of push back. Thanks,

Dave M.

Khyron said...

Anon:

Yeah, only problem is we're outside of an election cycle. But compile your hit list now and be ready. This is exactly why I voted against Hoyer in November.


Dave:

Heh. I do anger; people who know me know it as one of my MOs (among many, I like to think).

Feel free to take parts that you find are useful and leave the rest. Also, please inform others of this blog post and this issue. There are plenty of links within the post itself. As for organized groups to fight this legislation, I know of none YET. The places I'd check, firstly, would be Facebook (a group), Information Arbitrage, Infectious Greed and of course Traderfeed will probably follow this. The Kirk Report may as well. All of these except the latter are linked from my blog in the right hand navigation. See Trading and Investing Sites.

Dave M. said...

I found this link over at TraderFeed

http://www.rallycongress.com/no2tradertax/

It's a petition to stop the trader tax. Please check it out.

Dave M.

Chris Dunn said...

Amen! I couldn't have said it better myself. I pray this bill dies. It could potentially put thousands of honest business people out of business!

Khyron said...

Chris:

Thanks. It always feels good to be read. I'll admit to being biased when I say this, but...spread the word by forwarding the link to this post to your friends (and your enemies too, since they'll get tagged by this as well). Get the word out, and then complain to your congress critters LOUDLY. I'm not calling for armed revolt (yet) but Rick Santelli is on to something.

Hmmm, wonder if I can make it to the Chicago Tea Party?

Khyron said...

Dave:

Saw that, but I can't remember the source. Paid $9 for 3 letters to be sent. Thanks for the heads up to others.

Khyron said...

Just received my confirmation of hand delivery from RallyCongress.com.

ahrcanum said...

Sickening isn't it. Linked to you in my post on American Exceptionalism.