TRENTON, N.J. – Assemblyman Edward Thomson said legislation imposing a new tax on financial transactions would deplete the retirement savings of New Jersey taxpayers and threatens our already troubled public employee pension funds.
Thomson, an actuary who manages pension plans, said the new tax would be passed on to residents who participate in retirement plans, including pensions, individual retirement accounts and 401(k)s.
“This new financial transaction tax will rob our residents of the retirements that they have earned through years of hard work and saving,” said Thomson (R-Monmouth). “Anyone who actively invests in their retirement will be forced to work longer or make do with less in retirement.”
Under legislation (A4402) discussed Monday by the Assembly Financial Institutions Committee, the new tax would be imposed on firms that process more than 10,000 transactions a year. The tax of one quarter of one percent would apply to each financial transaction.
Thomson said the vast majority of trades involving small and middle-class investors are in mutual funds offered by firms like Fidelity Investments and T. Rowe Price Group, which are often traded hundreds of thousands of times per year.
“By targeting firms that process more than 10,000 transactions, this tax would erode the retirements of the most vulnerable investors who can least afford these cost increases,” he said.
Thomson noted that the new tax would also apply to the state pension funds, which are already underfunded by $70 billion.
“The unfortunate reality is this new tax will be passed along to the teachers, firefighters and police officers who are in the state pension funds,” said Thomson. “This is yet another attack on New Jersey’s middle-class residents who are struggling as our state becomes increasingly unaffordable.”