Letter to the Editor: Another Bad European Tax to Veto

Appearing today in the Wall Street Journal, SIFMA Executive Vice President for Public Policy and Advocacy Kenneth E. Bentsen, Jr., wrote a letter to the editor in response to an editorial in the Journal discussing the extraterritorial reach of France’s financial transaction tax. 

Your editorial “Obama Vetoes a Carbon Tax—in Europe” (Nov. 28) gets it right on one kind of unilateral, extraterritorial tax enacted by Europe. We believe the president should also take the same approach to European efforts—particularly France—to impose its domestic financial transaction tax (FTT) extraterritorially to U.S.-based transactions.

This summer the French government enacted a tax on secondary-market trading in American Depository Receipts (ADR) of French companies that applies to transactions between U.S. investors wholly within the U.S. France claims jurisdiction on the grounds that ADRs are designed to approximate the value of underlying French stocks, notwithstanding a long-standing provision in our income-tax treaty with France that addresses extraterritorial stock transaction taxes.

Elsewhere in Europe, the European Union is moving ahead with an unprecedented financial transaction-tax proposal that could also be imposed here in the U.S. and around the world if EU legislators follow a draft from Brussels.

If other countries wish to impose a tax that only harms economic growth and market activity within their own borders that is their choice. They should not attempt to tax U.S.-based products sold and traded solely in the U.S. as if these transactions were taking place in Paris or Berlin or Madrid. President Obama should protect U.S. companies, investors and markets from these kind of invasive FTTs just as he has with this new carbon tax.

Kenneth E. Bentsen Jr.

Executive Vice President, Public Policy & Advocacy

SIFMA