Bernie Sanders recently proposed taxing .5% on all stock trades, plus additional taxes on futures, in order to pay off the entire nation’s student loan debt. As I approach this topic, let me start by being transparent about my journey from college until now.
I came out of college with 27k worth of student loans (6.8% interest rate, unsubsidized) in 2012, and have since paid it all off. This process took roughly 5 years. It was paid aggressively over time as I also struggled to launch my own business. If at anytime I got my hands on a lump sum, I’d throw it at the debt. The only portion of it that was paid aside from my own money was roughly $1800 my wife received from her uncle as a unique gift – which she graciously used to throw at my loans. Going back through my payments to Navient (formerly Sallie-Mae) I’m able to see that for a good year I could only pay the minimum amount (this was when I left a full-time position to start my own company and only made $11,500 that year. The next year I netted $12,500. The third – $30,000). The rest of the time I paid about $50 over with large chunks on top of that where I could.
I’m now at a point in my life where I’m able to invest in stock. Currently my wife and I are using a stock account as a savings account so we can save up our down payment on the house we want to build. This account and my investment activity will be directly affected by the proposed taxes mentioned previously.
So as you can see, I’ve been on both sides of this. I’ve held a great deal of personal debt while making a terrible income, and likewise I’ve been debt free and able to invest in stock for my future. I’m going to start first by giving my arguments against Bernie’s plan from a moral and philosophical perspective. In Section 2, I will then give moral and practical ways to address this problem.