The following is a letter to the editor related to the Opinion piece today about the proposed Transaction tax for investors. If you would like to submit a letter, please send an email to the editor.Dear Editor,

I am sure that you realize that the esteemed Rep. Peter DeFazio (D., Ore.) has introduced a bill to impose a .25% tax on all securities transactions. I am an active securities investor. Like many active investors, I operate on thin margins. This tax will likely put me out of business.

Like most Americans, I am appalled that Wall Street bankers have recklessly disregarded prudent business practices. Their poor judgment combined with an irresponsible use of leverage has put our financial system in jeopardy. Now we taxpayers are being asked to bail them out. Mr. DeFazio's bill aims to punish Wall Street for its sins, but this tax applies to all investors, most of whom have done no harm.

To operate my investing business successfully, I have to be extremely careful about the risks I take. Unlike the Wall Street banks that got us into this mess, I can't use excessive leverage because

SEC

rules prohibit banks from providing it. Also unlike Wall Street banks, if I sustain losses because of bad judgment, no one will bail me out.

To impose a tax on the transactions of all investors is unjust; it punishes the many because of the sins of the few. I believe it will have adverse consequences that outweigh any possible benefits. A few likely consequences are:

¿

It will put many active investors out of work. This is because we operate with very thin profit margins. ¿

The "knock-on" effect multiplies the impact far beyond the relatively modest pool of individual investors who will lose their jobs. ¿

A transaction tax will lower capital gains dollar for dollar, so incremental tax revenue is questionable. ¿

It will harm an already weak banking system. This is because margin loans that banks provide to active investors are safe and profitable. At the current margin rate (50%) a stock would need to lose more than 50% of its value within a 24 hour period for a bank to be at risk of loss. Fewer active investors mean fewer margin loans. ¿

US financial markets are the envy of the world, largely because they are so liquid. Imposing a transaction tax will reduce liquidity by reducing market participants.

Shockingly, no one seems to know about this, I have contacted all my brokers, some of which are amongst the largest in the world, and they do not realize that the bill exists, or the damage it would do to them if passed. This bill would place a $50 tax on every $10,000 dollar round trip transaction in the market, which once again, would put most traders out of business.

The bill, called

"Let Wall Street Pay for Wall Street's Bailout Act of 2009"

it has now been appended to a health care bill.

To join the fight, you can sign a

petition

or learn more at the

investors coalition blog.

Sincerely,

Scott Slutsky

The American Coalition of Individual Investors

http://investorscoalition.blogspot.com/

Anna Maria, Fla.