Sticking it to the Taxpayer

In an interesting and in our opinion potentially clever move, the Pennsylvania House of Representatives has voted to hand state taxpayers the bill associated with their state's Sudan divestment effort. Under the legislation, taxpayers will be required to pay for losses sustained as a result of divestment. Pennsylvanian Taxpayers' first question should be: why? Currently, the bill does not determine how losses will be calculated. Will losses be netted against gains in new stocks that are purchased which are Sudan-free? Will investment managers submit a list of stocks they would have purchased without Sudan divestment restrictions and the resulting foregone gains? What if share prices of companies with links to Sudan fall? Perhaps a tax credit for Pennsylvania taxpayers is due? Not likely.

Relinquishing potential returns in Sudan-linked companies is one issue, but forcing the taxpayers to pay will likely be a hot topic. Unless, of course, this is a strategy to expose the complexity/futility of underlying divestment issues.