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Securities transaction tax looms as bitter pill
With the Gramm-Rudman clock ticking and time running out for the federal government to meet its annual deficit reduction targets, members of Congress and the Administration have begun to consider seriously new taxes to bolster federal revenues. One scheme that is generating plenty of angst among treasurers, investors and brokers is a securities transaction excise tax (STET).
Because this tax has yet to be proposed, its impact is difficult to measure. However, most well-informed observers predict the pinch will be felt acutely by institutional investors--notably pension funds--which heretofore have escaped the touch of federal tax collectors.
"That kind of tax probably falls heaviest on exempt institutions," observes Randall Kau, a tax attorney with Sullivan and Cromwell, New York.
Indeed, pension spokesmen recoil at the thought of a STET, claiming that the blow would cut into plan revenues and prompt cutbacks in benefits.
"It cannot help but make it more costly to sponsor pension plans," insists Jim Klein, deputy executive director of the Association of Private Pension and Welfare Plans.
Pension funds …