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

[loufah]

Quote from GreenTraderTax:

It's not "common sense" to curtail speculative trading. Rather, it could be perceived as government heavy-handed market manipulation to effectively bar short-term market makers (traders) from doing their job to deliver more efficient pricing in the markets for the benefit of the public.

It is certainly heavy-handed, but any short-term efficiency gain has to balanced by the long-term damage that things like $140 oil did to the country.

Your action if successful will leave only the major banks as traders and you are then placing the American public's trust in banks for pricing.

Thus returning us to the gentler period 50 years ago, where you invested in a company for the long haul, got dividends, took an actual interest in the company, filled out your proxy forms, etc. In many ways, that's morally superior to kids sitting in daytrading rooms playing the market like it's a video game, and investment banks writing complex software to trade a million times a day earning half a cent each time. Those things are not socially productive.

The tax is not "modest", but rather sufficient to put traders out of business. Lost trading jobs will cause loss of Main Street jobs too.

Maybe those ex-daytraders can do something productive with their lives now. And the GS traders will somehow make do with a mere $400K/yr salary.

Are you also going to pass a transaction tax on gambling transactions (or raise existing taxes on it)?

Already is one, effectively. At least here in NJ, casinos are taxed on their gross, not their net, and that's factored into their payouts.

 

[ksharmon]

IBD article

Proposals To Spur Hiring Costly, Likely To Swell Federal Deficit

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=514000

Although the EPI plan has a financing source and could theoretically fit, both Treasury Secretary Timothy Geithner and House Speaker Nancy Pelosi have expressed some wariness about the transaction tax idea.

What's more, trying to pass a tax on stock trades could bog down efforts to pass an emergency jobs bill, said Daniel Clifton, head of policy research at Strategas Research Partners.

Such a tax "is way too complicated to get something done on a quick basis," Clifton said.

So what other potential revenue sources are available? Some Democrats have talked about tapping the roughly $200 billion left in Troubled Asset Relief Program funds, but that would raise the deficit.

As Clifton notes, TARP is accounted for like an investment vehicle, meaning that deficits only come when the government recognizes losses.

 

[loufah]

OK. Would not be surprised if they intended to include forex. They might need to tighten up the wording a bit. The loose wording in the online gambling prohibition act is why the Fed is delaying its implementation.

 

[JOSEF]

Quote from loufah:



It will only penalize speculators. Yes, that includes you and me. It includes GS employees who are getting paid an average of $700K this year. It does really affect mom and pop long-term investors who are already used to paying 3% up front to their mutual fund broker. .25% is peanuts.

You make it sound like the only tax that will hit long-term investors is the 0.25% tax. When liquidity dries up as it will (most traders will go out of business, some will go to foreign markets), the bid-ask spreads will jump to where they were decades go. The increased spread will impact the long-term investor on every transaction they make.
Why do you think Sweden eliminated their transaction tax after only seven years?

 

[loufah]

Quote from Ghost of Cutten:

Because of this, I and many others feel that a more targeted, equitable, and deserved tax would be a one-off "windfall profits tax" on Wall Street institutions that benefited from the public bailout (to which I as a tax-payer contributed). Instead of capriciously ending the careers of tens of thousands of small firms and independent traders overnight, for a credit crisis they had no involvement with or blame for (thus raising costs for farmers to reduce their crop price risks, mortgage borrowers to hedge their interest rate risk, and other legitimate economic activity), you would be targeting those most responsible for the crisis, those who benefited most from the public purse, and those who are now making billions a year

This is well put. But they also need to penalize the guilty parties in cases like AIG, which (a) had losses, not windfall profits, last year and (b) had an offshore subsidiary (in AIG's case, London) doing most of the damage.

 

[FightTheFuture]

Quote from loufah:

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Thus returning us to the gentler period 50 years ago, where you invested in a company for the long haul, got dividends, took an actual interest in the company, filled out your proxy forms, etc. In many ways, that's morally superior to kids sitting in daytrading rooms playing the market like it's a video game, and investment banks writing complex software to trade a million times a day earning half a cent each time. Those things are not socially productive.

Maybe those ex-daytraders can do something productive with their lives now. And the GS traders will somehow make do with a mere $400K/yr salary.

Most still invest like 50 years ago with their mutual funds, 401's, pensions.

Many try, few trade.

 

[Xspurt]

Sorry to break this guys, but forget about foreign markets. This will be global and those who resist will be put under such pressure they will cave in.

Decades back this was proposed as a tax on Fx to fund the UN. I can't see Fx escaping.

The best chance of holding it back is the power to lobby in the US.

 

[JOSEF]

Quote from loufah:

It is certainly heavy-handed, but any short-term efficiency gain has to balanced by the long-term damage that things like $140 oil did to the country.

This is rather interesting. People only complained about the speculators when the oil prices went up (as you just did), but NEVER when the oil prices went down. But if you truly wanted to go after the oil speculators, why use a transaction tax? Why not go after the type of leverage they are able to get?

Thus returning us to the gentler period 50 years ago, where you invested in a company for the long haul, got dividends, took an actual interest in the company, filled out your proxy forms, etc.

Why not to go back 80 years in time to the 1929 crash? We had a transaction tax then as well. Look how well it served in preventing the crash.

Maybe those ex-daytraders can do something productive with their lives now. And the GS traders will somehow make do with a mere $400K/yr salary.

If this is what its all about, going after people who you perceive as not being productive, why only go after this group? Are you going to go after pro-athletes next, what about the cigarette companies, how about Hollywood and their movie making, how about McDonalds, how about the liquor industry? Why not simply let people live their lives without Big Brother dictating what they can and can't do?

 

[Anaconda]

Quote from benwm:

The US proposal goes a lot further than the UK 0.5% 'stamp duty' because the US tax woud cover forex, futures, options, i.e. all financial transactions. And the UK tax isn't applicable to market makers etc. so the revenue raised for the Government is small fry. Essentially the UK tax is a tax on the little guy who wants to trade/invest, as a result day traders tend to trade futures or forex.

The UK tax is exempt for members of the exchange, essentially most broker dealers not just market makers,

The current tax being proposed will not go through without exemptions for market makers, which are the big Wall Street firms. Why do you think Goldman, JP Morgan, Morgan Stanley, UBS are keeping quiet? This would be a goldmine for them.

 

[bears21]

Quote from jonnysharp:

Thought I would take the liberty to do the numbers of this tax and it's likely effect on the average American.

Ive attached a spreadsheet showing the cumulative returns with and without the tax, it's not much to begin with, however the wealth erosion it causes over the years is dramatic to say the least, for e.g....the average American is 34 years old and has 44 years of life expectancy left at which stage their average pension would be 32% lower with this transaction tax and by the time their wealth made it to their grandchildren, more than 60% of their legacy would have been taxed away by the socialist-state-sponsored-welfare-state we call a capitalist democracy.

Please spread these facts and let it be know to those in power this tax further enriches the Wall st-Washington cartel at the expense of the common man.

Whilst the likelihood of this tax being passed remains low, we shouldn't take it for granted, because things quickly change in politics and we could all have the wool pulled over our eyes, keep fighting against it. I'm actually frightened at the prospect of government taxes going forward, the government has big bills and plans on spending more and more and they are going to be knocking on our doors and putting their hands in our pockets to help finance their socialist policies.

Fuck them.

this is what i was talking about johnysharp unless americans see this in black and white on what it would do to the retirement accounts over the life of the tax. talking to mainstreet about other costs is talking way over their head. 80% of mainstreet investors think a spread is the food at dinner time. this has to be posted to major networks and newspapers to show the longterm effects of this so called modest tax.