dont know if this was mentioned, but all this money the guy thinks that would come from this tax will not be there. If this tax did go through, 80%+ of the daily volume would be gone and the only people they would be taxing would be the "mom and pops" of the world. Not to mention the number of jobs that rely on active traders(and the active traders themselves) around the world. Won't happen in my opinion.
1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Well, several things can happen ...
1. Firms and exchanges immediately react to the law and change themselves, or create new entities, to trade, under the gaming industry protocol. Afterall, the truth is out - it is gambling
2. DJIA drops 10 to 25% of its face value on the day the law kicks in, then spiral down to almost nothing. Why? Valuation of all long term pension/mutual/trust funds must be discounted by 1/2% immediately as all selling of assets have the added cost of 1/2% ... the impact gets infinitely larger as each transaction these funds have to carry out are taxed. Fun to see these funds go down in value every month even when the market is doing absolutely nothing.
3. Widen spread - bid 1% below and ask 1% above, across all taxed instruments.
It is fun to see how a government can talk out of the mess of this scale due to the introduction of a law with "good intention" ...
Edit: More I can think of here,
4. A drop of 50% to 75% daily volume is a sure thing - kiss of death for most brokerage firms.
5. All normal trading businesses and hedge fund businesses will go to Europe and Asia.
1. Firms and exchanges immediately react to the law and change themselves, or create new entities, to trade, under the gaming industry protocol. Afterall, the truth is out - it is gambling
2. DJIA drops 10 to 25% of its face value on the day the law kicks in, then spiral down to almost nothing. Why? Valuation of all long term pension/mutual/trust funds must be discounted by 1/2% immediately as all selling of assets have the added cost of 1/2% ... the impact gets infinitely larger as each transaction these funds have to carry out are taxed. Fun to see these funds go down in value every month even when the market is doing absolutely nothing.
3. Widen spread - bid 1% below and ask 1% above, across all taxed instruments.
It is fun to see how a government can talk out of the mess of this scale due to the introduction of a law with "good intention" ...
Edit: More I can think of here,
4. A drop of 50% to 75% daily volume is a sure thing - kiss of death for most brokerage firms.
5. All normal trading businesses and hedge fund businesses will go to Europe and Asia.
Exactly right. The Asian Markets are right on the heels of the US markets and if Congress kills the US markets the obvious choice would be to trade the Asian markets. Hang Seng...here we come....
Robert Green is conducting a conference call on the tax. Here is the info.
Join us for a Conference Call on Jan. 15
Title: Potential New Stock Tax Firestorm and Expected Tax Law Changes, Trader Tax & Investment Management Businesses (Q&A)
Date: Thursday, Jan. 15, 2009
Time: 4:15 PM - 5:30 PM EDT
Conference Call: Please use a regular phone line to dial (605) 990-0110, access code 416-752-255.
http://www.greencompany.com/EducationCenter/Greenblog011409.pdf
Join us for a Conference Call on Jan. 15
Title: Potential New Stock Tax Firestorm and Expected Tax Law Changes, Trader Tax & Investment Management Businesses (Q&A)
Date: Thursday, Jan. 15, 2009
Time: 4:15 PM - 5:30 PM EDT
Conference Call: Please use a regular phone line to dial (605) 990-0110, access code 416-752-255.
http://www.greencompany.com/EducationCenter/Greenblog011409.pdf
Quote from NielsenDK:
http://seekingalpha.com/article/97964-why-not-a-transaction-tax
Still believes it is way too high and will destroy the financial industry, including us
"An important potential drawback if the US were to impose a more substantial transactions tax alone, is that it might drive financial business offshore. There is an answer to this point. As noted, lot of countries already have such transactions taxes. Furthermore, lots would love to cooperate with the United States in an international program to harmonize such taxes internationally. This is precisely the sort of thing that many abroad have always asked Americans to participate in, but that we have not hitherto wanted to do."
NielsenDK, thanks for bringing this article up to our attention!!! Idiots like this need to be called out for this kind of crap.
I for one told this obvious know nothing what I thought of him and his idea that the financial sector should shrink via a comment on his article. I suggest others do the same.
Jeffrey Frankel is the poster child for "those who can't do teach" Who the hell is he to say how large the financial sector should be?
Can Mr. Frankel name another sector that provides more wealth to the US?
Sure as hell isn't anything he is doing.
amazing green jumps on anything to make a buck. truth is he'll be hurt bad if a .25% tax goes into affect as 90% of day traders will be gone. all we've read is one crappy article and traders go wild. nobody's even mentioned this tax from congress in the past 3-4 months. it will destroy millions of jobs from stock brokers to 10 million online trading accounts. it will never pass
I think what people here are forgetting is that for this type of tax to become law, it would have to pass through congress. Even though the Democrats hold the majority in the Senate, they would still need at least 10 Republican senators to vote yes on this for passage. Bottom line, it won't happen!!!!!!! So quit stressing over it!
There are 58 Democratic senators (59 if Franken wins). Democrats can pass just about anything with 60 votes.