Obviously, adding a 1% tax on all financial transactions, as this bill proposes, would drastically change how our economy operates. Keeping the markets efficient and accurately priced becomes much more difficult when any trade comes with a 1% cost. Especially when the 1% is imposed whether it results in a profit or a loss. From what I see in this bill, even selling one stock to purchase another would incur a 1% fee on the first sale and a 1% fee on the purchase of the second stock.
1% may not sound like much, but as money continues to change hands the government's take grows significantly. Let $100 change hands 10 times, and you're left with $90.44 of the original money. Let $100 change hands 100 times and you're down to $36.60.
Of course this scheme would transfer money to the government to pay down our debt (in theory, if the money is used as the bill intends), but at what cost? This additional financial friction could seriously slow down the economy and disrupt efficient market pricing. Finding the proper balance of taxes, debt, and economy growth is a very, very difficult problem, and this solution is not well thought out at all. Furthermore, eliminating our national debt is not going to solve all of our problems, as many would like us to believe.
Throwing ridiculous bills like this in the mix only serves to muddy the waters. It distract us from the real problems and the potentially viable solutions. Let's make small, incremental changes within our current tax structure to fix our problems in a reasonable manner.