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

[seasideheights]

Quote from KCalhoun:

I need to make the "fight the transaction tax" a recurring theme in my emails to my traders; any suggestions on what to tell them to specifically do, other than 'write your congressman?"...

thx,

ken

Write members of congress in their district & enter reader comments in online articles that discuss the tax. Authors of the articles DO read the comments & without our viewpoint being represented its as if it doesn't exist. We've had good success so far this year with that strategy.

Welcome to the thread Ken.

PS: Robert Green has set up an online petition. Details of which can be found on his blog at the following address. http://www.greencompany.com/blog/index.php

 

[Ghost of Cutten]

Quote from OldTrader:

Hello fellas:

Just letting you know I have written my Congressman this evening to let him know about the bill DeFazio is drafting regarding the transaction tax, and that his 3 colleagues (my Congressman is a Democrat) Maloney, McMahon, and Halvorson are circulating a letter against it, and that I would hope that he would support their effort against the tax.

I think this would be a good idea for all of us to do with our own Congressmen.

OldTrader

Good luck chaps. Here in the UK it looks like the Conservatives are heavy favourites to win the 2010 election, and their leader David Cameron has said he won't impose the tax. All it needs is one or two G7 countries to oppose it and it should die a death, so if the USA kills it as well then we should dodge the bullet. Don't wait for the elections to register your displeasure, 1 vote won't make a difference - make sure you write to your representatives, the media, industry/lobby groups, your broker etc.

Try to present the objections better than a lot of people are doing. Stress that it's a tax on *revenues* not profits, in a sector which has huge turnover and wafer-thin margins, and thus punishes losing trades or breakeven trades as much as profitable ones; suggest that if taxes need to be raised, or it's viewed as appropriate to tax the financial sector to recover last year's subsidy, then a tax on profits would be more economically rational, and not destroy swathes or legitimate financial jobs that did not contribute to the crisis (e.g. commodity traders/hedgers, retail brokerage firms, FCMs, exchanges etc). A profits tax on bailout recipients and/or higher income earners would raise just as much revenue, but not create massive economic distortions, and not end thousands of self-employed traders/brokers long-term careers overnight, thus keeping them out the unemployment/welfare/foreclosure numbers.

 

[Mike805]

Hey Guys,

What can we do to get this a--hole Defazio out of office? Who is Defazio's opponent? Anyone know of any skeletons in his closet?

At this point, this is personal. I want to see to it that Defazio's livelihood is taken away...

Any suggestions?

Mike

 

[GreenTraderTax]

Google News Alert for: financial transaction tax

Taxing Wall Street Today Wins Support for Keynes Idea
Bloomberg
30 (Bloomberg) -- John Maynard Keynes proposed a tax on financial transactions in the middle of the Great Depression, and another economist, James Tobin, ...
http://www.bloomberg.com/apps/news?pid=20601109&sid=atVAGbpceQ_g&pos=10

Green comment: Fairly good recap of recent events on the transaction tax and not good for us overall. “It’s akin to a gambling tax on socially negative activities,” says Andrew Sheng, a former chairman of the Hong Kong Securities and Futures Commission who now advises Chinese bank regulators. “

Ayn Rand's favorite expression was "check your premises." I've notice that most of the advocates for the financial-transaction tax argue it’s a fair way to reduce casino-type speculative trading (they refer to it as betting). But nothing could be further from the truth. Day and swing traders are using advanced technologies to analyze markets and carefully think out their trades. They are not spinning a roulette wheel and betting, as some argue. Perhaps, more inexperienced aspiring traders in China are, reminding me of the 1990s in the U.S., but those days are over in the US now.

Day and swing traders seek to close market inefficiencies, using arbitrage and other advanced techniques (based on science not luck). To call it casino-capitalism implies the odds are with the house and that would be a fix, perhaps allowed in Vegas but not in financial markets. Or, is the US seeking to be the “house” here, by charging “the vig” (tax) on every transaction? The real gamblers in the financial markets are the buy and hold uninformed investors who just chase momentum trades like gold now.

Like market makers, day traders’ fine tune financial markets, to ring out inefficiency and group think, which delivers better market pricing to regular investors. That is their role as “speculators” in financial markets as explained in my earlier post (and defined in Wikipedia for the economics benefits of speculation). Its daily changes in market prices with kicking of the tires by market makers (traders) that prevent pyramids on inefficiency, which can lead to bubbles. Does America only want big banks on Wall Street in the markets and do we all trust big banks to set market momentum and pricing? The small-business day trader offers an excellent check and balance and should not be put out of business.
-------------------------------------------------------------
IMF studying bank transaction tax option - Lipsky
Reuters
WASHINGTON, Nov 30 (Reuters) - The International Monetary Fund is studying all options, including a tax on banks' financial transactions, to help countries ...
http://www.reuters.com/article/bondsNews/idUSN3015550520091130

Green comment: I think the IMF was forced after the recent G20 meeting in Scotland to back track on their earlier statement of preferring the bank levy approach over the financial-transaction tax. The IMF, based in Washington doesn’t want to be perceived to be in lock-step with U.S. Secretary Geithner on preferring the bank levy over the transaction tax. UK’s PM Brown and the new EU president forced the IMF to publicly retract their preference and to give their proceedings and report more open balance.

"While some of the current supporters of a transactions tax intend it in Tobin's sense, others have extolled such a tax as a potential source of earmarked revenues for a variety of purposes," Lipsky said, according to the text of his speech.

I read this statement to mean that Lipsky is not crazy about the moving target for use of the transaction tax funds. The IMF is focused on recovery and thinks some countries are acting too fast to withdraw stimulus (the EU). I doubt the IMF is ready for tax increases (like this one), to slow growth (this one would), and to use the tax for long-term initiatives like global poverty. I think the IMF prefers the bank levy for concrete future bank bailouts (which they view as a necessity – think Dubai World this week).
---------------------------------------------------------------------
Part II next

 

[GreenTraderTax]

Dems sour on stock transaction tax
Politico
“Proponents of a transaction tax argue that a small 0.25 percent tax on stocks would be paid for by the highly paid financial traders and would not affect ...
http://www.politico.com/news/stories/1109/30015.html

Green comment: Great! NY and IL Democratic Congressman are hearing our Protest http://www.rallycongress.com/greentradertax-traders-association1/ and understanding this tax will hurt Main Street, the biggest customer of their Wall Street and Chicago’s futures exchanges. Midwest Main Street built Chicago to be a great city and exchange, to facilitate their bread basket of the world. We need to keep pressing the Main Street argument. I am not crazy about singling out Wall Street for the fury, but I am sure they can take care of themselves too.

Why a Financial Transactions Tax Makes Sense
BNET
As with carving banks down to size, Europe is taking the lead in exploring the financial transactions tax. UK Prime Minister Gordon Brown recently endorsed ...
http://industry.bnet.com/financial-services/10005212/why-a-financial-transactions-tax-makes-sense/

Green comments: Another harmful article to our cause. Again, it’s focused on “big banks”, a “tiny levy” and to combat “roulette” betting. Dredging up Keynes from the mid 1930s is not always such a good argument and Keynes is getting a little warn out in my view. Remember, the governments handled the Great Depression very poorly even with Keynes advice, and in most Pundits views, that extended the depression for a decade and more. Only World War II truly bailed government out (at horrible expense). The biggest lesson of the 1930s is that more taxes and government control of decision making, with clamping down on entrepreneurs, investors and risk taking was a big mistake. This tax is more of the same. Tobin was very afraid of the U.S. dollar going off the gold standard, and he did not trust speculators to value the dollar, thinking they would value it too low – hence he wanted to put sand in their wheels with the “Tobin Tax” concept. But Tobin underestimated traders, as the progressives are now, and speculators properly valued the dollar then, as they properly value markets now. Tobin doesn’t recommend his ill-conceived Tobin Tax now either.

Is this financial transaction tax an attempt by government to stifle the true values in the markets? Sort of like allowing the accounting standards board to enact mark to market accounting and then to suspend use of it, after it caused havoc with toxic asset pricing. Getting rid of the small trader leaves the markets to the government, big banks and uninformed investors. Isn’t that going to be a stacked deck as in China?

This is a little scary. The U.S. seems enamored with China. The Chinese government does not have short sellers and dissent in the media. They simply squash them and restrict many types of activities that are currently allowed in America. Allowing something by law, but taxing it out of existence is like not allowing it at all. Not only is a trader tax and putting traders out of business, an affront to liberalism (below), it’s a government power play to control market prices, by squashing the market maker speculator. Isn’t that illegal or unconstitutional? I don’t think tax law is allowed to do away with useful legal mechanisms in society, but rather to take some fair cream off the top (of income usually) to pay the public purse.

Per Wikipedia, “Cultural Liberalism is ultimately founded on a concept of natural rights and civil liberties, and the belief that the major purpose of the government is to protect those rights.” Isn’t it highly-hypocritical for liberals to steal traders’ right to make a living and carry-on their natural right to doing business in America? Trading is a useful speculation for refining markets, traders pay taxes on income like everyone else, and yet liberals want to moralize about what’s right and wrong like a totalitarian arch-conservative. How about being liberal and live and let live? This tax will put small business traders out of business and that’s not some tiny tax.

 

[gkishot]

Quote from GreenTraderTax:

Dems sour on stock transaction tax
Politico
“Proponents of a transaction tax argue that a small 0.25 percent tax on stocks would be paid for by the highly paid financial traders and would not affect ...
http://www.politico.com/news/stories/1109/30015.html

Green comment: Great! NY and IL Democratic Congressman are hearing our Protest http://www.rallycongress.com/greentradertax-traders-association1/ and understanding this tax will hurt Main Street, the biggest customer of their Wall Street and Chicago’s futures exchanges. Midwest Main Street built Chicago to be a great city and exchange, to facilitate their bread basket of the world. We need to keep pressing the Main Street argument. I am not crazy about singling out Wall Street for the fury, but I am sure they can take care of themselves too.

Why a Financial Transactions Tax Makes Sense
BNET
As with carving banks down to size, Europe is taking the lead in exploring the financial transactions tax. UK Prime Minister Gordon Brown recently endorsed ...
http://industry.bnet.com/financial-services/10005212/why-a-financial-transactions-tax-makes-sense/

Green comments: Another harmful article to our cause. Again, it’s focused on “big banks”, a “tiny levy” and to combat “roulette” betting. Dredging up Keynes from the mid 1930s is not always such a good argument and Keynes is getting a little warn out in my view. Remember, the governments handled the Great Depression very poorly even with Keynes advice, and in most Pundits views, that extended the depression for a decade and more. Only World War II truly bailed government out (at horrible expense). The biggest lesson of the 1930s is that more taxes and government control of decision making, with clamping down on entrepreneurs, investors and risk taking was a big mistake. This tax is more of the same. Tobin was very afraid of the U.S. dollar going off the gold standard, and he did not trust speculators to value the dollar, thinking they would value it too low – hence he wanted to put sand in their wheels with the “Tobin Tax” concept. But Tobin underestimated traders, as the progressives are now, and speculators properly valued the dollar then, as they properly value markets now. Tobin doesn’t recommend his ill-conceived Tobin Tax now either.

Is this financial transaction tax an attempt by government to stifle the true values in the markets? Sort of like allowing the accounting standards board to enact mark to market accounting and then to suspend use of it, after it caused havoc with toxic asset pricing. Getting rid of the small trader leaves the markets to the government, big banks and uninformed investors. Isn’t that going to be a stacked deck as in China?

This is a little scary. The U.S. seems enamored with China. The Chinese government does not have short sellers and dissent in the media. They simply squash them and restrict many types of activities that are currently allowed in America. Allowing something by law, but taxing it out of existence is like not allowing it at all. Not only is a trader tax and putting traders out of business, an affront to liberalism (below), it’s a government power play to control market prices, by squashing the market maker speculator. Isn’t that illegal or unconstitutional? I don’t think tax law is allowed to do away with useful legal mechanisms in society, but rather to take some fair cream off the top (of income usually) to pay the public purse.

Per Wikipedia, “Cultural Liberalism is ultimately founded on a concept of natural rights and civil liberties, and the belief that the major purpose of the government is to protect those rights.” Isn’t it highly-hypocritical for liberals to steal traders’ right to make a living and carry-on their natural right to doing business in America? Trading is a useful speculation for refining markets, traders pay taxes on income like everyone else, and yet liberals want to moralize about what’s right and wrong like a totalitarian arch-conservative. How about being liberal and live and let live? This tax will put small business traders out of business and that’s not some tiny tax.

Great thinking, Mr. Green.

We all call it tax but it's not even a tax in it's usual sense because taxes are normally applied to the profits of the corporations.

http://en.wikipedia.org/wiki/Corporate_tax

Correct me if I am wrong but it would be unprecedented in the history of US taxation that the tax applies to B2B transactions not the profits. By the same token congress should think about taxing all B2B transactions on other goods and merchandise out there since the capital market is a model for all other markets.

 

[MrPowerBallad]

Quote from seasideheights:

In addition, if you don't live in any of their districts, write a letter to your Representative asking him/her to sign onto the Carolyn Maloney letter condemning the tax. Be sure to mention that she is a Democrat. Ask them to join their fellow democrats in keeping the USA the financial capital of the world. Remind them that with the Internet, trading in a foreign country only requires clicking a different button on a trading screen, and once people start trading in another country, it's going to be difficult to get them back.

Done!

 

[PlusMinus]

Quote from gkishot:

Great thinking, Mr. Green.

We all call it tax but it's not even a tax in it's usual sense because taxes are normally applied to the profits of the corporations.

http://en.wikipedia.org/wiki/Corporate_tax

Correct me if I am wrong but it would be unprecedented in the history of US taxation that the tax applies to B2B transactions not the profits. By the same token congress should think about taxing all B2B transactions on other goods and merchandise out there since the capital market is a model for all other markets.

Good point, in fact we should all start referring to it as a "Fine". Change the language now and get this into the consciousness of people because that is what this is, it's a fine for participating in the open capital markets.

Ask your friend's and family how they feel about the new fine that's being proposed and if it bothers them that it will heavily affect their mutual funds?

Can we also have a "tax"... oops, fine, for every dollar spent on political advertising? I mean, that's not a socially positive use of money is it? How about all those ad companies that make hundreds of millions cutting commercials for political candidates who don't have a shot in hell of being elected to higher offices? That's money that could help create jobs, right?

Where does it end?

 

[jj69]

If anyone is a subscriber to Rev, and to optionmonster(Jon Najarian) or any other service please forward the politico article and have ALL of their subscribers email/call their congressmen to sign on to the "Dear Colleagues" letter or to say thanks if they are in the districts of the three congressmen. Let's try to halt this thing right here.

 

[ranger64]

http://www.businessinsider.com/tim-...t-to-oppose-financial-transaction-tax-2009-11


Geithner made it very clear that the U.S. would not support a bank-transaction tax. This is absolutely the right position because the financial transaction tax is based on dangerous nonsense.

Here are the three main problems:

* Low cost
index funds would be hurt. Far from discouraging excessive risk taking, the tax would discourage long term index fund investing in favor of riskier strategies. The Vanguard 500 Index fund, as Mike Santoli pointed out in Barrons, would have paid $34 million on a financial transaction tax of 0.25% in 2007 because it bought and sold a total of $13.6 billion of securities that year. This would double the expenses of the fund, punishing conservative investors and encouraging them to seek greater returns through more risk.
* Banks would respond by becoming riskier. The bailout fund created by the tax would discourage appropriate risk management by the firms who pay the tax and disincentivize creditors from monitoring the risk at those firms.
* Taxpayers would still be on the hook. The bailout fund would be a fiction. All money collected would be spent by politicians for current spending programs. It wouldn't be "saved" for future expenditures in any real sense. This means that future bailouts would be funded by taxpayers despite the existence of the tax.

So we're giving Geithner a big "Boo-ya" for holding fast against the transaction tax.