![]() ![]() “An FTT generates a substantial drag on investment returns as the tax cascades and compounds over time. Meanwhile, Vanguard, one of the world’s largest asset managers, warned in late 2019 that an FTT would hinder millions of families saving for retirement. The CBO, however, did acknowledge that a big source of uncertainty around an FTT is how much transactions would drop as a result of the tax. ![]() The organization argued that a tax on financial transactions would limit the amount of short-term speculation and computer-assisted high-frequency trading. The CBO in 2018 said that a 0.1% tax would increase revenues by $777 billion from 2019 through 2028, and would also reduce business and individual income. ![]() households, owned mutual funds as of mid-2017, according to Investment Company Institute, a leading global association of regulated funds, including mutual funds, exchange-traded funds, closed-end funds and unit investment trusts. An estimated 56.2 million households, or 44.5% of all U.S. But, as taxes do, it would raise the transaction cost, and not just for banks and professional traders, but Main Street investors as well.Īn FTT would affect the millions of Americans who are exposed to the capital markets through mutual funds inside and outside of employer-sponsored retirement plans, which include 401(k) plans and IRAs. Supporters of an FTT say it would be a substantial revenue source that could generate billions of dollars annually. What, exactly, is an FTT? And how could it impact Main Street and Wall Street?Īn FTT is a tax, usually a fraction of a percent, on the sale and/or purchase of a security, such as a stock or bond. As the 2020 presidential election approaches, a financial transaction tax (FTT) is coming back into focus for investors. ![]()
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