1/4% Tax on all stock trades pushed in NY Times today

Quote from Blotto:

Yes, another example of a populist tax which has exemptions written in for the very "rich people" that the government claims to be targeting. All professional securities dealers are exempt - the only people who pay the stamp tax on equities are ordinary investors - ie the man on the street.

Anyone who knows what is what will either do it through an exempted company or as a contract for difference written against a counterparty who is exempt from the taxes.

I should add that the financially ignorant looters pushing for these taxes rightly bear their effects, while the enterprising and successful find creative ways of avoiding them.

Anyone in the UK who believes in "taxing the speculators" is already losing half of one percent of their pension and investments due to similar foolish attitudes by their forebears.
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CFDs are not a substitute for traders use to trading instantaneously with penny spreads and less than penny commissions. CFDs take time to put up and take time to exit. the number of stocks available for CFDs is limited. it is a poor substitute by american standards
 
Quote from zdreg:

CFDs are not a substitute for traders use to trading instantaneously with penny spreads and less than penny commissions. CFDs take time to put up and take time to exit. the number of stocks available for CFDs is limited. it is a poor substitute by american standards
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I completely agree. However they are a preferred tool for large private directional based traders who do not qualify for stamp tax exemption on equity purposes. The existence of the tax makes day trading impossible for all but market makers though.

The reason I mention them is that it is yet another example of a "tax the rich" strategy which hits the very people who support it. Wealthy individuals can transact a CFD with a specialist firm and avoid the stamp duty, and the counterparty can offset in the underlying or OTC with another firm as they are exempt from the transaction tax. Joe the Plumber buying his 100 shares a month for his pension...gets hit with the tax designed to punish "those greedy speculators".

If it were not so serious it would be truly funny!
 
Quote from andohmeeta:

Australian Government's Henry Tax Review (Final Report) May 2, 2010, officially rejects any form of Tobin tax:-

Box D4-1: A Tobin Tax?

http://taxreview.treasury.gov.au/co...Final_Report_Part_2/chapter_d4-2.htm#Box_D4_1

:D
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"The goal of a Tobin tax is to dampen de-stabilising speculative financial activity. By putting 'sand in the wheels' of the financial system, proponents believe that financial prices (such as foreign exchange rates) would be less likely to overshoot or undershoot economic fundamentals. If de-stabilising speculative transactions are more typically short-term and high-volume, they would be disproportionately affected by the tax, even though it would be levied at a low rate, based on value, to limit its impact on real activity. More recently, proponents have argued that the revenues could be used to finance international public goods, such as the United Nations or world poverty alleviation.

Transaction taxes like the Tobin tax are generally inefficient because the tax rate rises according to how often an asset changes hands, rather than any underlying economic value. There is no 'economic base' for transaction taxes. In general, transactions tend to create value because they shift resources to higher-value purposes. If these prices are publicly available, the transactions also provide the public information that assists wider resource allocation in the community.

Financial markets are not perfectly efficient. Notably, the global financial crisis resulted from a widespread mispricing of risk by financial markets. However, a financial transactions tax would not directly address the sources of financial market failure, such as moral hazard arising from implicit or explicit government guarantees, incentive structures skewed toward short-term gains, and human psychology. There is no necessary correlation between trading volume and the creation of systemic risk. The tax would apply indiscriminately to transactions that are socially useful — including those that contribute to financial system stability — and those that are costly.

In fact, transaction taxes could potentially reduce financial stability. They would reduce market liquidity, which could lead to prices becoming more volatile and more prone to misalignment. They would also impede hedging activity, which can involve a large volume of transactions to disperse risk. Although the great majority of financial transactions occur between financial firms, much of this is generated by the process of reallocating risk between financial firms rather than speculation. Further, speculation is not inherently destabilising as it can sometimes help correct misalignments.

It would be difficult to prevent activity shifting to unregulated sectors or jurisdictions. Businesses would also have an incentive to structure themselves to avoid the tax. For example, large, vertically integrated businesses use fewer transactions to make the same product and would pay less tax. Even if levied at a low rate, a tax would cause some impediment to real activity (for instance, currency transactions are essential for international trade and investment) and may impede some necessary adjustments."

Pretty good analysis.
 
Quote from TraDaToR:

I guess this article from April 26 hasn't been posted:

http://www.politico.com/news/stories/0410/36326.html

Interesting developments on the bank tax.
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I read this when it first came out. I think it's pretty much a done deal that we'll see a bank tax of some sort (not a FTT) but how the bank tax will be structured is still up in the air. This goes nicely with the recommendations that the IMF came out with recently. I really don't see the banks being able to kill of a bank tax.

I think we'll see a fin reg bill pass in the next month or so followed by a bank tax proposal after that. That should quench the public's thirst for Wall St. blood I think
:)



-Guru
 
http://www.n-tv.de/politik/Griechenland-Gespraeche-geplatzt-article858495.html


Interesting developments in Germany: during the last few days all parties except the liberals (FDP) had been pushing for the international introduction of a financial transaction tax and wanted to have it included as precondition for a joint cross-party Greece resolution that is supposed to pass on Friday.

But today the FDP actually threatened to break up the coalition with Angela Merkels CDU if the word “transaction tax” appears in any part of the resolution, arguing that as a result of such a tax average people would pay for the costs of the crisis with their small saving accounts and investments.
The FDP does support examining the suggestions of the IMF concerning bank levies, though.
 
Today's major market move is horrendous for our cause & electronic trading in general.

Expect the enemies to come out in full force over the coming hours & days.
 
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