Proposed financial transaction taxes would negatively impact U.S. pension plans, according to a new report from the Committee on Capital Markets Regulation.
The report from the independent research organization is in response to proposals from Democratic presidential candidates Bernie Sanders, Kamala Harris and Elizabeth Warren, in which stock trades, bond trades and derivative transactions would be taxed anywhere from 10 basis points to 50 basis points.
The report said the negative impact of the tax on U.S. pension funds would outweigh the generation of revenues the proposed taxes promise, citing studies that show the $378.4 billion California Public Employees' Retirement System, Sacramento, would pay more than $500 million annually in direct costs from the tax, and $162 million in indirect costs from the widening of bid-ask spreads. According to the report, the $199 billion New York City Retirement Systems would face $1.3 billion in annual costs.
John Gulliver, the committee's executive director, said in a telephone interview there was a good consensus among the diverse mix of committee members that the transaction taxes would have a negative impact on pension funds and the overall financial market.
The report also cites BlackRock's estimate that a financial transaction tax of 10 basis points would cause a loss of $2,300 over 10 years for an investment of $10,000 in its global equity fund.
The Committee on Capital Markets Regulation, founded in 2006, consists of 35 leaders from the financial industry, business, law, accounting and academic communities.
The report is available on the committee's website.