Kamala Harris Wants to Tax your Retirement and 529 Plans

On July 29, 2019, Kamala Harris wrote a Medium article describing how she would pay for her “Medicare For All” plan. Harris wrote about imposing a financial transaction tax (FTT) to pay for a specific part of her plan, which slightly differed from Sen. Bernie Sanders’ (I-Vt.) plan to add an additional income-based premium. 

Harris states that:

To pay for this specific change, I would tax Wall Street stock trades at 0.2%, bond trades at 0.1%, and derivative transactions at 0.002%. Think of it like this: that’s a $2 fee on a $1,000 trade by investors and big banks. 

Harris’ FTT is a terrible idea. Americans’ 401(k)s, IRAs, and brokerage accounts would be decimated because a tax would assuredly reduce returns. According to Gallup, 63 percent of American households earning between $40,000 and $100,000 own stock as “an individual stock, a stock mutual fund, or in a self-directed 401(k) or IRA.” All Americans would see smaller nest eggs. 

Implementing the FTT is also likely to negatively impact cryptocurrency transactions—especially since new bitcoin and ether exchange-traded funds (ETFs) started trading on public stock exchanges. 

The FTT would also make it harder for parents to save for their kid’s education. According to one report that discusses FTTs, the tax “would negatively impact 529 College Savings Plan Portfolios across the country, with projected cost ranging from $2 million to $19 million for a plan portfolio with a size of $2 billion to $12 billion range, respectively.” This is not a tax on Wall Street, this is a tax on retirement and hope for the future. More than anything parents want to ensure their kid’s future is secure. If parents are unable to save enough for their child’s education, it makes the American dream that much harder to achieve. 

The FTT is a nonstarter and should never be implemented. Policymakers need to bolster Americans’ retirement, not destroy it.