Thank you Mr Robert 
1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Thank you Mr Robert Much is made by proponents of the tax of London's use of a stamp duty apparently without ill effects. However, amongst other things, the existence of large scale exemptions make that argument meaningless.
In 2007 a report : âStamp duty: its impact and the benefits of its abolitionâ was commissioned. One statistic that particularly caught my eye (page 24) was that, "in 2005 the proportion of trading subject to stamp duty was around 29%." In other words 71% of trading volume on the LSE was exempt from the tax that year! It is good to have a hard number to back up our case.
The report makes a number of good points in our favour, particularly regarding the behavioural impact of the tax, an area where the pro-tax crowd have tended to be evasive.
www.abi.org.uk/content/contentfilemanager.aspx?contentid=24950
In 2007 a report : âStamp duty: its impact and the benefits of its abolitionâ was commissioned. One statistic that particularly caught my eye (page 24) was that, "in 2005 the proportion of trading subject to stamp duty was around 29%." In other words 71% of trading volume on the LSE was exempt from the tax that year! It is good to have a hard number to back up our case.
The report makes a number of good points in our favour, particularly regarding the behavioural impact of the tax, an area where the pro-tax crowd have tended to be evasive.
www.abi.org.uk/content/contentfilemanager.aspx?contentid=24950
After receiving plenty of feedback from the trading community (thank you all), and having finally located the primary source of the $150bn figure (Dean Baker's 2000 self-published article entitled "Taxing Financial Speculation - Shifting the Tax Burden from Wages to Wagers") I was able to make some interesting changes to the article.
While it has to be admitted that Mr. Baker did not assume 'static' tax income (assuming instead a 1/3 volume declines across asset classes, which at least for stocks would be consistent with the Chinese rate increase from 0.2% to 0.5%), a more serious mistake has instead emerged: as much as 2/3 of the $150 billion figure widely quoted in the media is obviously missing from the current bill proposed by Rep. DeFazio, simply due to the exemption for government bonds, corporate bonds and currencies, all of which were assumed by Mr. Baker to be taxed at a 0.1% rate, and all of which have been omitted from the current legislative proposal (see section 4475 of the HR 4191 Act, which should have enumerated them explicitly - correct me if I'm wrong!)
So the article concludes now as follows:
These three asset classes missing from the DeFazio proposal are: Government Bonds, Corporate Bonds, and Currencies, which by Mr. Baker's own estimate should have been responsible for almost 2/3 of the overall $120 billion tax revenue, i.e. around $95 billion ($27.7bn, $14.7bn, and $33.3bn, in total $75.7 billion in 2000, so using Mr. Baker's 1.25 adjustment factor, in "current money" the missing revenue would amount to $94.6 billion).
Even Mr. Baker's estimate made for stocks ($36.5 billion) looks like taken from an entirely different tax, because it is based on a higher tax rate of 0.5%, not 0.25%. This two-fold increase in the tax rate for equities can be possibly justified by an optimistic assumption that both sides of every transaction can be always taxed, without any customer-firm transactions in which only one side is taxed, and the other (market-making firm) is exempt. The missing 95 billion dollars annually cannot be so readily justified though.
"White House, Democratic lawmakers cut deal on deficit commission"
Faced with growing alarm over the nation's soaring debt, the White House and congressional Democrats tentatively agreed Tuesday to create an independent budget commission and to put its recommendations for fiscal solvency to a vote in Congress by the end of this year.
Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs -- including Medicare, Medicaid and Social Security -- that threaten to drive the nation's debt to levels not seen since World War II.
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/19/AR2010011903310_pf.html
We need to keep an eye on this. Let's hope they don't try and sneak in a FTT...
-Guru
Faced with growing alarm over the nation's soaring debt, the White House and congressional Democrats tentatively agreed Tuesday to create an independent budget commission and to put its recommendations for fiscal solvency to a vote in Congress by the end of this year.
Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs -- including Medicare, Medicaid and Social Security -- that threaten to drive the nation's debt to levels not seen since World War II.
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/19/AR2010011903310_pf.html
We need to keep an eye on this. Let's hope they don't try and sneak in a FTT...
-Guru
We should be okay. From the article:
"Fourteen commission members would have to agree on any deficit-reduction plan, a prospect that skeptics called a recipe for gridlock because action would depend on the support of at least two Republicans for a plan that is sure to include tax increases."