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1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Bill O'Brien on the transaction tax
http://www.forbes.com/2009/11/25/transaction-tax-obrien-intelligent-investing-direct-edge.html
Steve Forbes: What regulations do you fear right now, potential regulations?
Bill O'Brien: I guess that I think regulations that I fear most are ones that pit Wall Street against Main Street because I believe the health of both depend on each other. So, things like, you know, transaction taxes, for example. And, you know, I admire your thoughts on tax policy generally. But most people don't realize that whenever those types of reforms, and I put that lightly, or measures, have been implemented, it has none of the anticipated benefits and several unanticipated, negative consequences.
http://www.forbes.com/2009/11/25/transaction-tax-obrien-intelligent-investing-direct-edge.html
Steve Forbes: What regulations do you fear right now, potential regulations?
Bill O'Brien: I guess that I think regulations that I fear most are ones that pit Wall Street against Main Street because I believe the health of both depend on each other. So, things like, you know, transaction taxes, for example. And, you know, I admire your thoughts on tax policy generally. But most people don't realize that whenever those types of reforms, and I put that lightly, or measures, have been implemented, it has none of the anticipated benefits and several unanticipated, negative consequences.
Some ideas in countering the pro-tax zealots.
We need to call this an Investor Tax, not a Trader Tax.
We need to call this a middle class Tax, not a Wall Street investment bank tax.
The tax will hit everyone of every pay scale.
Obama promised no tax hikes for the middle class.
This would violate that promise.
Equate the tax to buying CD's at a bank. Would you like to pay a tax to the US government to buy a CD? How about a tax to cash your weekly paycheck? Would you like to pay a tax on buying a savings bond? Why should you have to pay taxes on converting your money to a stock & back to money again? Most banks allow you to buy a stock as well as a CD or a savings bond now.
Also mention how deceptive the tax is in dollar terms. If $150 Billion is to be collected, that's a huge number that's going to come out of everyone's pocket.
Differentiate Wall Street Investment Houses from the middle class that buys & sells some stocks.
We need to call this an Investor Tax, not a Trader Tax.
We need to call this a middle class Tax, not a Wall Street investment bank tax.
The tax will hit everyone of every pay scale.
Obama promised no tax hikes for the middle class.
This would violate that promise.
Equate the tax to buying CD's at a bank. Would you like to pay a tax to the US government to buy a CD? How about a tax to cash your weekly paycheck? Would you like to pay a tax on buying a savings bond? Why should you have to pay taxes on converting your money to a stock & back to money again? Most banks allow you to buy a stock as well as a CD or a savings bond now.
Also mention how deceptive the tax is in dollar terms. If $150 Billion is to be collected, that's a huge number that's going to come out of everyone's pocket.
Differentiate Wall Street Investment Houses from the middle class that buys & sells some stocks.
Quote from gkishot:
So why not apply the tobin tax exclusively to the speculators and leave long-term investors out of it? The problem is they can't do it. They can't tell them apart. They have to tax everybody because everybody is investor and speculator at the same time. If investor is losing money by holding stock over many years he is a speculator. On the other hand if a speculator is making money over long period of time consistently it means that he is doing something right that does not contradict the nature of the market. If his average holding period is one month but he is making consistent profits for many years who is going to call him a speculator if he can survive in the market long enough? At least market agrees with his strategy. He is an investor from Mr.MARKET perspective.
Investment is also a bet.
As for the social value of the short-term investors they provide liquidity to those who buy IPOs.
Long term investors most certainly can get out of this. If yo trade you pay the tax at the source. You get a credit on you tax return for tax you paid if your trades do not exceed x per year. The broker simply reports this on your 1099 and it is matched at the service center. That will reduce fraud. I am for the tax
Quote from Tom1am:
Long term investors most certainly can get out of this. If yo trade you pay the tax at the source. You get a credit on you tax return for tax you paid if your trades do not exceed x per year. The broker simply reports this on your 1099 and it is matched at the service center. That will reduce fraud. I am for the tax
Long term investors only take liquidity, they don't add. Market makers won't exist without an exception. Unfortunately your trading style only exist at the mercy of the market maker. Thats of course if you don't mind paying the tax in the form of the spread.
Quote from ksharmon:
"Please Kendall, letâs put this one to rest. Not even Chuck Schumer thinks itâs a good idea so I canât see this getting any traction in the Senate and maybe not even in the House either. "
What we all should have learned is that there is very little difference between one Democrat and another, or for that matter, one Republican and another. When they vote, they basically vote in a unit these days.
Take this Louisiana Senator Mary Landrieu. It sounded like she was more or less against the health bill, but her party bought her vote for a $200 Million deal with medicaid.
I would imagine that a Senator from New York or perhaps someone who represented Chicago, might have a problem with this bill. But let's face it, their only constituents aren't the exchange/trading folks. I certainly can imagine circumstances where they will be thrown under the bus, especially in these days of populism and anti-bank sentiment.
I certainly wouldn't recommend that anyone sit back, confident that it won't pass. I would work away at this every day like it was about to be passed tomorrow. Because in the final analysis, in the event it does pass we're all out of business. If there's even a small chance, I'm going to fight it. The frightening thing is to see the sentiment out there. No one understands how destructive this bill will actually be to the capital markets, not just the traders themselves.
For those of you who need some perspective, check out the Tax Reform Act of 1986 (I believe that was it's name). In those days we had tax provisions that provided tax shelter to those who took advantage. You invested money in an oil deal for instance, you got a major depletion writeoff on your taxes, which in some cases was so significant that you were able to write off your entire investment against your ordinary income. Same for real estate investment, you got a deduction for depreciation against your ordinary income. Computer deals, railroad cars etc etc., anything that could be depreciated or depleted in accordance with existing tax laws. Entire industries were involved in this, large companies. And of course, many investors in those days had bought apartment buildings strictly for the tax advantage.
With the passage of this Act, tax shelters ended. It broke an entire industry. Some large companies. Many individuals lost significant money in apartment buildings, etc.
And here's how it applies now. It was sold to the public by pointing out that large investors paid no tax, while all the little guys did. Hard to fight that one. It causes investment real estate prices to plummet. And of course, the who nature of investment changed at that point.
No one is looking at the impact on the capital works as a whole. They're only looking at what they think they can raise in revenues. But trust me, it's not just your job that ends, the capital markets will completely change without short-term traders. This is the point that needs to be pounded home.
If that spread widens to let's say $.50 from $.01 currently, then the cost to every investor of this transaction tax becomes 10X as much as the tax itself. Where do I get $.50??? This is a standard type of spread that existed back in the 70s and 80s when volume was a fraction of what it is today. And that's where volume is going if this tax is implemented.
OldTrader
Quote from lindq:
The argument for providing liquidity is useless. It goes right over the head of the non-trading public.
Anytime a trader sees or hears a comment that trading is a "non-productive activity", they need to respond forcefully with something similar to the following:
OUR ACTIVITIES ARE ABSOLUTELY NOT "NON-PRODUCTIVE".
AS PRIVATE TRADERS WE GENERATE FEES THAT SUPPORT HUNDREDS OF COMPANIES AND THOUSANDS OF SOLID MIDDLE CLASS JOBS THROUGHOUT THE COUNTRY.
WE SUPPORT NEWS SERVICES, INTERNET SERVICE PROVIDERS, BROKERS, DATA PROVIDERS, WEBSITES, SOFTWARE DEVELOPERS, AND A HOST OF OTHER SMALL AND MEDIUM SIZED COMPANIES.
EACH OF THESE COMPANIES IN TURN PROVIDES INCOME TO OTHER COMPANIES THAT ASSIST IN SUPPORTING THEM, AND TO THE STATE AND FEDERAL GOVERNMENT IN THE FORM OF TAXES.
THE FINANCIAL INDUSTRY THAT WE AS TRADERS SUPPORT IS NOT WALL STREET. IT IS THROUGHOUT THE NATION, AND THAT IS WHERE THE IMPACT OF ANY TRANSACTION TAX ON INDIVDUALS WILL MOST BE FELT.
All of what you say, while accurate and true, will be interpreted by the average dim bulb as weasel language.
You have to keep it simple.
Tell them that their pension fund and their 401K will both no longer be able to keep up with inflation.
They won't give a flying fuck about traders after that.
We also need to state other things besides hitting mainstreet at the retirement level. Of course we still mention that. But in the respect of the new bill being floated it looks to exempt retirement accounts, pensions, 401ks and IRA'S. So they could tout this as mainstreet exempt which we know is not true either, plenty of people have savings portfolios outside of their retirement accounts. If you trade futures or forex, and have an IRA you cna always trade futures and forex in an ira. I trade FX in an IRA of mine. You just have to use a custodian trust company for that, and its a pain in the ass. So just to always be on the safe side , fund your ira to the max! So you will be able to trade something in the off chance this bill goes through!