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1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Although 0.25% doesn't sound like much, it is instructive to see the proposed tax in context. As the average price of a share of stock is $40, the tax on the average share would be 10 cents.
That is higher than the average commission charged by securities firms, which is 5 cents per share. Is the tax supposed to exceed the gross income brokers receive for their efforts?
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20100110/REG/301109997/1034/TAXES
That is higher than the average commission charged by securities firms, which is 5 cents per share. Is the tax supposed to exceed the gross income brokers receive for their efforts?
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20100110/REG/301109997/1034/TAXES
A note on the composition of the Rules Committee:
It has 13 members: 9 Democrats, 4 Republicans. It also has 4 co-sponsors of 4191 (all Democrats). The Chair of the Committee is Louis Slaughter, one of the co-sponsors. This effectively means that the Committee will be able to set the rules for how the bill will be handled on the floor and it will be biased towards passage of 4191.
It has 13 members: 9 Democrats, 4 Republicans. It also has 4 co-sponsors of 4191 (all Democrats). The Chair of the Committee is Louis Slaughter, one of the co-sponsors. This effectively means that the Committee will be able to set the rules for how the bill will be handled on the floor and it will be biased towards passage of 4191.
Quote from TPCS:
A note on the composition of the Rules Committee:
It has 13 members: 9 Democrats, 4 Republicans. It also has 4 co-sponsors of 4191 (all Democrats). The Chair of the Committee is Louis Slaughter, one of the co-sponsors. This effectively means that the Committee will be able to set the rules for how the bill will be handled on the floor and it will be biased towards passage of 4191.
We are screwed.
Regarding the Ways and Means Committee, the best chance for the bill to die without ever coming up for a floor vote is here. It is currently chaired by Charles Rangel. However, if he steps aside for whatever reason then Pete Stark becomes Chair. He is a co-sponsor of 4191. Kind of bad luck on that since there are only 2 co-sponsors on that Committee. The composition of the 41 members is 26 Democrats and 15 Republicans.
Kudos to everyone here trying to fight the good fight. This could obviously be the difference between trading for a living or not, so even if you think there is only a small chance of something passing, it's best to do everything we can to make sure it doesn't.
That being said, I think our best way to combat this is to convince the average middle class non-trader that they will be the ones bearing the brunt of this. Think about it- to the average person, "Letting Wall St. help Main St." sounds pretty darn good, and that's how this is being sold to them. So, without even looking into the details, the vast majority are in favor, and they outnumber us traders by a huge margin. I think it's a good idea to e-mail our representatives, and I have, but they knew before this was even presented that we'd oppose it. If we can get large numbers of non-financial people to oppose it, I think that would carry much more weight.
IMO, we need to convince the masses that this is just another tax on the middle class. Sure, as it's currently presented, there are exemptions for the first $100K of trades and for retirement accounts and mutual funds, which sounds good to them I'm sure. However, we need to hammer home the fact that the mutual funds that most of them hold in their retirement accounts will still face this tax on their trading, both directly and via much wider spreads. Mutual funds just pass on their returns (net of fees) to their investors, and they will being paying this tax every time they buy and sell in their portfolio. If they didn't exempt mutual funds, this would just be another double tax, one on the mutual fund managers (that are passed on to the investors) and another on the investor themselves. Add the capital gain tax into the mix for non-retirement accounts, and it's a mess.
Likewise, their returns will be diminished due to the much wider spreads that will be a fact of life if this thing is passed, again lowering the returns to investors. Instead of being able to buy or sell most stocks a couple of pennies away from the last price, you can expect that amount to double, triple, or more, which will again put a damper on returns, including mutual funds. The ONLY way spreads aren't dramatically increased and volume doesn't dry up is if they give an exemption to the market makers, and if they do that, "Wall St." won't be paying for this, the middle class will. Not only in terms of decreased returns for themselves, but in terms of higher taxes to pay for the increase in unemployment, the underfunding of government pension plans that will inevitably follow with lower stock market returns, etc.
I've read a lot of good stuff on here about how this will put people out of work, move trading and jobs overseas, the stock market wasn't the cause of our problems, etc. While I agree that these are all good and relevant points, I think the average person doesn't really care too much- they still have the attitude that it's "us vs. them, make those greedy SOB's pay their fair share, etc.". I think we should focus more on explaining how this will impact all non-traders. If we can simply, effectively convince our working class friends and neighbors that this will harm them more than Wall St., then I think we have a much better chance at defeating this. An e-mail from a teacher or firefighter to their representatives will hold more weight than one from a trader IMO.
Good job so far, I just wanted to give my $.02 on another angle that I think makes sense to take.
That being said, I think our best way to combat this is to convince the average middle class non-trader that they will be the ones bearing the brunt of this. Think about it- to the average person, "Letting Wall St. help Main St." sounds pretty darn good, and that's how this is being sold to them. So, without even looking into the details, the vast majority are in favor, and they outnumber us traders by a huge margin. I think it's a good idea to e-mail our representatives, and I have, but they knew before this was even presented that we'd oppose it. If we can get large numbers of non-financial people to oppose it, I think that would carry much more weight.
IMO, we need to convince the masses that this is just another tax on the middle class. Sure, as it's currently presented, there are exemptions for the first $100K of trades and for retirement accounts and mutual funds, which sounds good to them I'm sure. However, we need to hammer home the fact that the mutual funds that most of them hold in their retirement accounts will still face this tax on their trading, both directly and via much wider spreads. Mutual funds just pass on their returns (net of fees) to their investors, and they will being paying this tax every time they buy and sell in their portfolio. If they didn't exempt mutual funds, this would just be another double tax, one on the mutual fund managers (that are passed on to the investors) and another on the investor themselves. Add the capital gain tax into the mix for non-retirement accounts, and it's a mess.
Likewise, their returns will be diminished due to the much wider spreads that will be a fact of life if this thing is passed, again lowering the returns to investors. Instead of being able to buy or sell most stocks a couple of pennies away from the last price, you can expect that amount to double, triple, or more, which will again put a damper on returns, including mutual funds. The ONLY way spreads aren't dramatically increased and volume doesn't dry up is if they give an exemption to the market makers, and if they do that, "Wall St." won't be paying for this, the middle class will. Not only in terms of decreased returns for themselves, but in terms of higher taxes to pay for the increase in unemployment, the underfunding of government pension plans that will inevitably follow with lower stock market returns, etc.
I've read a lot of good stuff on here about how this will put people out of work, move trading and jobs overseas, the stock market wasn't the cause of our problems, etc. While I agree that these are all good and relevant points, I think the average person doesn't really care too much- they still have the attitude that it's "us vs. them, make those greedy SOB's pay their fair share, etc.". I think we should focus more on explaining how this will impact all non-traders. If we can simply, effectively convince our working class friends and neighbors that this will harm them more than Wall St., then I think we have a much better chance at defeating this. An e-mail from a teacher or firefighter to their representatives will hold more weight than one from a trader IMO.
Good job so far, I just wanted to give my $.02 on another angle that I think makes sense to take.
Quote from Moneyball:
I've read a lot of good stuff on here about how this will put people out of work, move trading and jobs overseas, the stock market wasn't the cause of our problems, etc. While I agree that these are all good and relevant points, I think the average person doesn't really care too much- they still have the attitude that it's "us vs. them, make those greedy SOB's pay their fair share, etc.". I think we should focus more on explaining how this will impact all non-traders. If we can simply, effectively convince our working class friends and neighbors that this will harm them more than Wall St., then I think we have a much better chance at defeating this. An e-mail from a teacher or firefighter to their representatives will hold more weight than one from a trader IMO.
The only effective way to convince the masses is through media with good publications that explain the negative impact of TT on Main Street. Unfortunately small retail traders do not control the mass media.
Quote from Moneyball:
Kudos to everyone here trying to fight the good fight. This could obviously be the difference between trading for a living or not, so even if you think there is only a small chance of something passing, it's best to do everything we can to make sure it doesn't.
That being said, I think our best way to combat this is to convince the average middle class non-trader that they will be the ones bearing the brunt of this. Think about it- to the average person, "Letting Wall St. help Main St." sounds pretty darn good, and that's how this is being sold to them. So, without even looking into the details, the vast majority are in favor, and they outnumber us traders by a huge margin. I think it's a good idea to e-mail our representatives, and I have, but they knew before this was even presented that we'd oppose it. If we can get large numbers of non-financial people to oppose it, I think that would carry much more weight.
IMO, we need to convince the masses that this is just another tax on the middle class. Sure, as it's currently presented, there are exemptions for the first $100K of trades and for retirement accounts and mutual funds, which sounds good to them I'm sure. However, we need to hammer home the fact that the mutual funds that most of them hold in their retirement accounts will still face this tax on their trading, both directly and via much wider spreads. Mutual funds just pass on their returns (net of fees) to their investors, and they will being paying this tax every time they buy and sell in their portfolio. If they didn't exempt mutual funds, this would just be another double tax, one on the mutual fund managers (that are passed on to the investors) and another on the investor themselves. Add the capital gain tax into the mix for non-retirement accounts, and it's a mess.
Likewise, their returns will be diminished due to the much wider spreads that will be a fact of life if this thing is passed, again lowering the returns to investors. Instead of being able to buy or sell most stocks a couple of pennies away from the last price, you can expect that amount to double, triple, or more, which will again put a damper on returns, including mutual funds. The ONLY way spreads aren't dramatically increased and volume doesn't dry up is if they give an exemption to the market makers, and if they do that, "Wall St." won't be paying for this, the middle class will. Not only in terms of decreased returns for themselves, but in terms of higher taxes to pay for the increase in unemployment, the underfunding of government pension plans that will inevitably follow with lower stock market returns, etc.
I've read a lot of good stuff on here about how this will put people out of work, move trading and jobs overseas, the stock market wasn't the cause of our problems, etc. While I agree that these are all good and relevant points, I think the average person doesn't really care too much- they still have the attitude that it's "us vs. them, make those greedy SOB's pay their fair share, etc.". I think we should focus more on explaining how this will impact all non-traders. If we can simply, effectively convince our working class friends and neighbors that this will harm them more than Wall St., then I think we have a much better chance at defeating this. An e-mail from a teacher or firefighter to their representatives will hold more weight than one from a trader IMO.
Good job so far, I just wanted to give my $.02 on another angle that I think makes sense to take.
I created a blog dedicated to explaining these issues to non-traders. Some of the posts cover the points mentioned above:
Misconception #1
Misconception #2
H.R. 4191: Some Comments
I will be writing up more points over time. Feel free to use any that you think would be helpful.