A little more indepth on the last article here it is:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aX8CA2eqhWn4
http://www.bloomberg.com/apps/news?pid=20601103&sid=aX8CA2eqhWn4
1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
From this past weekend's Economist
Desperate measures
The prime ministerââ¬â¢s flirtation with an idea whose time never seems to come
IT WAS, veterans of economic summitry noted, the kind of idea a French minister would once have floated simply to annoy Gordon Brown. On November 7th the prime minister used the meeting of G20 finance ministers in his native Scotland to set out four options for building a sturdier financial system. The most eye-catching was the hoary idea of a global tax on financial transactions. The revenue would serve as an insurance fund in case the banks required costly government bail-outs in future. Mr Brown did not invoke the name of James Tobin, the economist who proposed a levy on currency dealings in the 1970s. A disbelieving media did that for him.
Unless a Tobin tax were implemented worldwide, trading would move out of any country that enforced it. Some in Europe are keen on the levy but Mr Brown must have known that the Americans and others would kill the idea. It was also an extraordinary reverse from a politician who not only described the idea as having ââ¬Åbig problemsââ¬Â and ââ¬Åvery substantial drawbacksââ¬Â when he was chancellor of the exchequer, but also showed no enthusiasm when Lord Turner, the chairman of the Financial Services Authority (FSA), raised it in August.
Yet there are two reasons why Mr Brownââ¬â¢s suggestionââ¬âwhich got short shrift from Mervyn King, the governor of the Bank of England, on November 11thââ¬âmay help him, even though it flopped. Firstly, there is widespread support for the aim of his proposal, if not for the specific means. The Americans would like banks to make some sort of insurance contribution. Hector Sants, chief executive of the FSA, wants a pool of ââ¬Åcontingent capitalââ¬Â. Downing Street is quietly confident that senior British bankers will soon come out in support of measures to build such a fund. Mr Brown was acclaimed for leading the world in bailing out the banks last year. He now wants to be seen at the vanguard of the mission to design a new financial system. Posing as a bold outrider, as he did at the summit, may yet help.
Domestic political positioning is the other rationale behind Mr Brownââ¬â¢s proposal. Having spent so much of his time in government cultivating the City of London, Mr Brown now fears being seen as too soft on bankers. George Osborne, the Conservativesââ¬â¢ shadow chancellor, has recently sought to capture the public mood by promising curbs on bonuses in the financial sector. Tellingly, the Tories have only quietly opposed the idea of a transactions tax and have suggested other ways of raising money for an insurance fund.
A worry is that politiciansââ¬â¢ zeal to outdo each otherââ¬â¢s punitive line on bankers will go too far. Financial services remain a big part of the economy. Income and corporation tax revenues from the City paid for much of the spending splurge that Mr Brown began in 2000. Neither party has a persuasive vision of which non-financial sectors will drive growth in future, though both talk modishly of green jobs and yearn nebulously for Britain to start making things again. Common sense would suggest a calmer discourse on bankers. But there arenââ¬â¢t many votes in that.
Desperate measures
The prime ministerââ¬â¢s flirtation with an idea whose time never seems to come
IT WAS, veterans of economic summitry noted, the kind of idea a French minister would once have floated simply to annoy Gordon Brown. On November 7th the prime minister used the meeting of G20 finance ministers in his native Scotland to set out four options for building a sturdier financial system. The most eye-catching was the hoary idea of a global tax on financial transactions. The revenue would serve as an insurance fund in case the banks required costly government bail-outs in future. Mr Brown did not invoke the name of James Tobin, the economist who proposed a levy on currency dealings in the 1970s. A disbelieving media did that for him.
Unless a Tobin tax were implemented worldwide, trading would move out of any country that enforced it. Some in Europe are keen on the levy but Mr Brown must have known that the Americans and others would kill the idea. It was also an extraordinary reverse from a politician who not only described the idea as having ââ¬Åbig problemsââ¬Â and ââ¬Åvery substantial drawbacksââ¬Â when he was chancellor of the exchequer, but also showed no enthusiasm when Lord Turner, the chairman of the Financial Services Authority (FSA), raised it in August.
Yet there are two reasons why Mr Brownââ¬â¢s suggestionââ¬âwhich got short shrift from Mervyn King, the governor of the Bank of England, on November 11thââ¬âmay help him, even though it flopped. Firstly, there is widespread support for the aim of his proposal, if not for the specific means. The Americans would like banks to make some sort of insurance contribution. Hector Sants, chief executive of the FSA, wants a pool of ââ¬Åcontingent capitalââ¬Â. Downing Street is quietly confident that senior British bankers will soon come out in support of measures to build such a fund. Mr Brown was acclaimed for leading the world in bailing out the banks last year. He now wants to be seen at the vanguard of the mission to design a new financial system. Posing as a bold outrider, as he did at the summit, may yet help.
Domestic political positioning is the other rationale behind Mr Brownââ¬â¢s proposal. Having spent so much of his time in government cultivating the City of London, Mr Brown now fears being seen as too soft on bankers. George Osborne, the Conservativesââ¬â¢ shadow chancellor, has recently sought to capture the public mood by promising curbs on bonuses in the financial sector. Tellingly, the Tories have only quietly opposed the idea of a transactions tax and have suggested other ways of raising money for an insurance fund.
A worry is that politiciansââ¬â¢ zeal to outdo each otherââ¬â¢s punitive line on bankers will go too far. Financial services remain a big part of the economy. Income and corporation tax revenues from the City paid for much of the spending splurge that Mr Brown began in 2000. Neither party has a persuasive vision of which non-financial sectors will drive growth in future, though both talk modishly of green jobs and yearn nebulously for Britain to start making things again. Common sense would suggest a calmer discourse on bankers. But there arenââ¬â¢t many votes in that.
The first time I've heard them formally differentiate percentages among instrument class:
"The tax rate would range from 0.02 percent for swaps, futures and credit-default swaps to 0.25 percent for stocks, according to the lawmakersâ letter. Options would be taxed at the rate that applies to the type of the underlying asset. "
How feasible is a financial tax to fund adaptation?
Dan Smith, the secretary general of International Alert, an independent peace-building organisation, thinks a tax on financial transactions is just the thing.
Why? "Since unimaginably large sums of money are changing hands in currency speculation each hour, even a tiny fraction of the annual total is very big. A 0.05% tax on UK financial transactions would raise between ã30 billion and ã100 billion a year. The higher number is from (an) Austrian study and is the estimated revenue even if the overall value of transactions fell by two-thirds from pre-crunch levels," Smith notes.
Arguments for such a tax are persuasive, and not just because few people these days have much sympathy for bankers, Smith says in a new blog.
"With a barely noticeable effect on the level of activity in the financial marketplace, the revenue rolls in," he says.
"The more governments that do it the better. There is money to pay off the effects of the recession, invest in adaptation to climate change in developing countries, use on other good purposes, and some to lay aside for a future rainy day so the next time the banking sector does a crash and burn spectacular, the emergency rescue doesn't impose a heavy burden on national finances and tax-paying citizens," Smith adds.
http://www.alertnet.org/db/blogs/60714/2009/10/17-131940-1.htm
Dan Smith, the secretary general of International Alert, an independent peace-building organisation, thinks a tax on financial transactions is just the thing.
Why? "Since unimaginably large sums of money are changing hands in currency speculation each hour, even a tiny fraction of the annual total is very big. A 0.05% tax on UK financial transactions would raise between ã30 billion and ã100 billion a year. The higher number is from (an) Austrian study and is the estimated revenue even if the overall value of transactions fell by two-thirds from pre-crunch levels," Smith notes.
Arguments for such a tax are persuasive, and not just because few people these days have much sympathy for bankers, Smith says in a new blog.
"With a barely noticeable effect on the level of activity in the financial marketplace, the revenue rolls in," he says.
"The more governments that do it the better. There is money to pay off the effects of the recession, invest in adaptation to climate change in developing countries, use on other good purposes, and some to lay aside for a future rainy day so the next time the banking sector does a crash and burn spectacular, the emergency rescue doesn't impose a heavy burden on national finances and tax-paying citizens," Smith adds.
http://www.alertnet.org/db/blogs/60714/2009/10/17-131940-1.htm
Was flipping through the channels, MSNBC came up and they started talking about this on the Ed Show. He basically thinks this is the cat's meow. The look on his eyes, like he found a buried treasure when kept utter that 100 billion mark. They had on a congresssman from New York I believe. He said that pensions and 401Ks wouldn't be touched, nor trades above $100k.
Of course, these idiots don't realize that a lot of what these retirement funds will be invested in will be affected. I didn't think this would become law. Now I'm not so sure.
Of course, these idiots don't realize that a lot of what these retirement funds will be invested in will be affected. I didn't think this would become law. Now I'm not so sure.
Why do I get a feeling that the banks would get some sort of exemption (while the independent trader takes it uta somehow). Note that the instruments that are primarily used by banks/companies/funds, and not individuals, according to the above, would be taxed at 1/10th the amount. Wink wink.
I agree on the equities liquidity drying up but not as much with the futures if its 40$a round turn, still tradable, But equities I cant seem to think you can trade them at that point. If they dont tax currencies , it wasnt mentioned this time but it was in the past, traders might flow there.