Modern Markets Initiative Issues New Report on FTT – The Retirement Tax

Modern Markets Initiative (MMI), the education advocacy organization devoted to the role of technological innovation in creating the world’s best markets, today released a new report on the economic impact of Senate bill S. 1587, the Inclusive Prosperity Act of 2019’s proposed financial transaction tax (“FTT”). The report, A Study on the Effects of a Retirement Tax/Financial Transaction Tax on Retirement Security, College Savings and University Investments, pointedly focuses on how the potential tax would impact the entire financial and investing ecosystem, particularly Americans saving for retirement and for their children’s college educations. A full version can be downloaded and reviewed here.

The retirement tax has been heavily touted and endorsed by several of the Democratic candidates running for President.

“Our in-depth analysis shows that the FTT that has been presented by some politicians in Washington as a ‘pound of flesh from Wall Street’ is in reality, a severe retirement tax on American savers from all income levels,” said MMI CEO Kirsten Wegner. “Not only would the FTT fail to raise a meaningful amount of revenue, as history has shown, but the tax would also negatively impact pension funds, university endowments and other savings vehicles. It is truly ironic that the FTT would actually hurt the very same people that the proponents of the tax aim to help.”

MMI’s analysis makes clear that any transaction tax would drastically harm institutions trading large volumes of securities such as pension funds, mutual funds and other institutional investors that directly represent the financial interests of countless American workers, as well as average Main Street investors with 401k Retirement or 529 College Savings accounts. The FTT that has been recently championed by certain Democratic nomination hopefuls, including Bernie Sanders and Elizabeth Warren, would cause significant financial implications for average American savers, including:

  • $19 million in annual FTT on 529 College Savings plans, or the equivalent of a year of full in-state tuition for 1,900 students at a public university;
  • $24 million in annual FTT for a single public university endowment with $20 billion AUM, or the equivalent of 3,227 college scholarship in a given year;
  • $64,232 in annual FTT over the lifetime of a 401k account, or the equivalent of delaying the average individual’s retirement by two years; and,
  • $132 million in annual FTT for the typical state public pension plan with more than $68 billion in assets under management.

The report goes into detail to transparently lay out how MMI researched and determined its economic impact projections. For each savings vehicle provided in the report, analysts have provided detail on the asset class exposure, calculation methods, spread costs and other considerations related to that savings vehicle.

Wegner added: “Transparency is a key principle of MMI’s values, so it was very important for us to share our full analysis with the public. We fully intend to drive the conversation about the FTT and educate policymakers, the public and key stakeholders on the true impact of such a tax.”

For more information about its new report and MMI’s education efforts, visit