A Matter of Perspective
Added Costs From a Financial Transaction Tax Would Be
Minuscule Compared to Fees Investors Already Pay
March 12, 2014 -
A financial transaction tax
(FTT) would cost ordinary investors just a minuscule amount compared to costs
and other hidden fees they already bear, while bringing in revenue and
discouraging risky trading practices, a new Public Citizen report shows. The
report, “A Matter of Perspective,” analyzes the costs that would be paid by a
hypothetical investor who invests his or her money either in a mutual fund or a
self-directed portfolio of individual stocks.
If the person invested
$85,000 (representing roughly the average size of a 401(k) account) in a mutual
fund with average fees and asset turnover rates, that investor now would spend
$1,144 a year in fees and hidden costs, the report concludes. In comparison,
the investor would pay only $24.48 in annual costs resulting from a 0.03
percent FTT. If one includes an FTT purchase tax on an $85,000 investment, the
investor’s total, first-year FTT-related costs would be just $49.48.
Similarly, an investor who
buys and purchases his or her own individual stocks currently pays about 13
times more in costs than the investor would pay for in annual costs resulting
from a 0.03 percent FTT, the report shows.