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EUROPE EDITION Friday, February 15, 2013
Home World Europe U.K. U.S. Business Markets Market Data Tech Life & Culture Opinion Heard on the Street Property
Peggy Noonan's Blog Leisure & Arts Letters to the Editor Political Diary Discussion Groups
TOP STORIES IN OPINION 1 of 12 2 of 12 3 of 12 4 of 12
Mark Boal: The Art The Minority Youth Greg Lukianoff: Broken Windows in Siberia
and Politics of 'Zero Unemployment Act Campus
Dark Thirty' Clampdowns on
Free Speech Flunk
Their Legal Tests
REVIEW & OUTLOOK February 14, 2013, 7:25 p.m. ET
Europe Taxes the World
Even Obama opposes the latest financial transactions levy.
Article Video Comments (23) MORE IN OPINION »
Email Print
Stop the digital printing presses. The Obama Administration has found another tax
it doesn't like—too bad this one is also in Europe. U.S. opposition helped to sink the
EU's airline carbon tax last year, and this week the Treasury came out against the
new tax on financial transactions by 11 EU nations.
Europe has been toying with this tax for years, both to punish "irresponsible"
financial trading and as another source of revenue for creaky welfare states. This
week's version proposes to raise €30 billion to €35 billion a year, by imposing a
minimum tax of 0.1% on trades in shares, bonds and other securities and 0.01% on
derivatives transactions.
The European Commission predicts it
Related Video
will lower the 11 states' combined GDP Available to WSJ.com Subscribers
by 0.28% in the long run. But "smart
recycling" of the revenue back into the
economy could mean a countervailing
GDP bump of 0.2%, it adds. Yeah,
"smart recycling." That's the ticket.
Sucking €30 billion out of the financial The Power of Shopping Spree for
Financial Services Roundtable CEO Tim Pawlenty Negative Thinking Wall Street
industry is bound to drive the taxed
says too-big-to-fail banks are significantly stronger
than they were before the financial crisis. Photo: activities elsewhere, which is why the
Getty Images Airbus to Drop
proposal tries to cast a very wide net.
Lithium-Ion Batteries
In previous versions, the scope of the From Newest Jet
tax was defined by the "residence principle," which means that it hits any
transacting party in a participant state, regardless of where the transaction takes Airbus is dropping lithium-ion
batteries from its newest jet
place. due to concerns that Universal Music to
regulatory uncertainty could
delay initial deliveries of
Get More Cash for
This week's proposal adds the "issuance principle," which means that a trade in a
A350 aircraft. YouTube Covers
German bond, say, can be taxed even if neither buyer nor seller live in one of the
11 taxing countries. That means investors far afield of Austria, Belgium, Estonia,
France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain will be hit.
Double taxation is also a concern, particularly when a transaction crosses into a Don't Miss [?]
country that isn't one of the new taxers. A German asset manager who buys shares
of a British company, for instance, will pay the new transaction tax to Berlin and the
U.K. stamp duty to Her Majesty's Treasury.
2. We already have evidence from Europe of how investors respond even to Opinion: The Apple Announces Why We Outlasted
supposedly minimal transaction taxes. Since last August, purchases of shares in Wimpification of Largest iPad Yet the Neanderthal
America
large-cap French firms have carried a 0.2% levy. Research has found that trading
activity in French equities took a dive both ahead of and immediately following the
tax's introduction. Trading in stocks subject to the tax fell even as trading in other Most Popular in Europe
stocks rose. Europe's Woes Deepen
Heinz Sold as Deals Take Off
As for those speculators whose "socially undesirable" transactions the levy was
Meteorite Falls in Russian Urals
supposed to curb, Bloomberg found that many investors were escaping the tax by
using contracts for difference, which are equity derivatives that allow traders to bet Olympian Pistorius to Face Charges in Killing
on share prices without having to own the underlying shares. Run Your Family Like a Business
The Obama Administration is right to oppose the tax on grounds that it will punish
More in Opinion
American investors. Now, about that tax increase on capital gains and dividends . .
. Noonan: A Faith Unshaken but Unsettled
Canada, Druckenmiller and Warsh: Generational Theft Needs
A version of this article appeared February 15, 2013, on page A14 in the U.S. edition of The Wall Street to Be Arrested
Journal, with the headline: Europe Taxes the World.
James Bovard: Perform Criminal Background Checks at Your
Peril
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1. Europe's Woes Deepen
2. Heinz Sold as Deals Take Off
3. Meteorite Falls in Russian Urals
4. Olympian Pistorius to Face Charges in Killing
5. Run Your Family Like a Business
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EUROPE EDITION Friday, February 15, 2013
Home World Europe U.K. U.S. Business Markets Market Data Tech Life & Culture Opinion Heard on the Street Property
Peggy Noonan's Blog Leisure & Arts Letters to the Editor Political Diary Discussion Groups
TOP STORIES IN OPINION 1 of 12 2 of 12 3 of 12 4 of 12
Mark Boal: The Art The Minority Youth Greg Lukianoff: Broken Windows in Siberia
and Politics of 'Zero Unemployment Act Campus
Dark Thirty' Clampdowns on
Free Speech Flunk
Their Legal Tests
REVIEW & OUTLOOK February 14, 2013, 7:25 p.m. ET
Europe Taxes the World
Even Obama opposes the latest financial transactions levy.
Article Video Comments (23) MORE IN OPINION »
Email Print
Stop the digital printing presses. The Obama Administration has found another tax
it doesn't like—too bad this one is also in Europe. U.S. opposition helped to sink the
EU's airline carbon tax last year, and this week the Treasury came out against the
new tax on financial transactions by 11 EU nations.
Europe has been toying with this tax for years, both to punish "irresponsible"
financial trading and as another source of revenue for creaky welfare states. This
week's version proposes to raise €30 billion to €35 billion a year, by imposing a
minimum tax of 0.1% on trades in shares, bonds and other securities and 0.01% on
derivatives transactions.
The European Commission predicts it
Related Video
will lower the 11 states' combined GDP Available to WSJ.com Subscribers
by 0.28% in the long run. But "smart
recycling" of the revenue back into the
economy could mean a countervailing
GDP bump of 0.2%, it adds. Yeah,
"smart recycling." That's the ticket.
Sucking €30 billion out of the financial The Power of Shopping Spree for
Financial Services Roundtable CEO Tim Pawlenty Negative Thinking Wall Street
industry is bound to drive the taxed
says too-big-to-fail banks are significantly stronger
than they were before the financial crisis. Photo: activities elsewhere, which is why the
Getty Images Airbus to Drop
proposal tries to cast a very wide net.
Lithium-Ion Batteries
In previous versions, the scope of the From Newest Jet
tax was defined by the "residence principle," which means that it hits any
transacting party in a participant state, regardless of where the transaction takes Airbus is dropping lithium-ion
batteries from its newest jet
place. due to concerns that Universal Music to
regulatory uncertainty could
delay initial deliveries of
Get More Cash for
This week's proposal adds the "issuance principle," which means that a trade in a
A350 aircraft. YouTube Covers
German bond, say, can be taxed even if neither buyer nor seller live in one of the
11 taxing countries. That means investors far afield of Austria, Belgium, Estonia,
France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain will be hit.
Double taxation is also a concern, particularly when a transaction crosses into a Don't Miss [?]
country that isn't one of the new taxers. A German asset manager who buys shares
of a British company, for instance, will pay the new transaction tax to Berlin and the
U.K. stamp duty to Her Majesty's Treasury.](https://image.slidesharecdn.com/europetaxestheworld-wsj-com-130217170517-phpapp02/85/Europe-taxes-the-World-1-320.jpg?cb=1361120788)
