Should Congress and the President find enough appeal in HR 4191 to enact it, there are three possible outcomes. The first is that there are enough loopholes that the tax raises little money but has unfortunate side effects like driving jobs and tax revenues overseas or inflating the balance sheets of banks. The second is that there are no meaningful loopholes but, surprisingly, people still trade a lot and enormous taxes are paid, in which case we expect stock prices to fall dramatically. The third, and most likely, is that there aren’t enough exemptions and investors react by sharply reducing trading activity, so there is little revenue but great harm to the market and the economy. Whichever of these occurs, the sponsors of the Bill will face a hard time explaining how, when aiming to shoot the banks, they shot their constituents who will then pay for the next Wall Street bailout.
