Not possible. It is impossible to enforce US laws on foreign brokerage firms in other countries unless other countries cooperate. Of course, if you trade US securities oversea through foreign brokerage firms, then you you have to pay US TT. Beyond US borders, US are pretty powerless to do anything.
1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Not possible. It is impossible to enforce US laws on foreign brokerage firms in other countries unless other countries cooperate. Of course, if you trade US securities oversea through foreign brokerage firms, then you you have to pay US TT. Beyond US borders, US are pretty powerless to do anything.
When I came to Wall Street as an accountant in 1977 it was run by firms like my client the Loeb family of Loeb Rhoades, the 3rd largest broker. The Loeb family saying was "you can't lose commissions." Just prior to that commissions were fixed and fixed high. Way higher than a transaction tax and productivity savings of the last decade+. Wall Street was sleepier and so was American finance. The middle-class was climbing though good jobs and real estate (suburbs and more).
There have been incredible advances since 1966, in floating exchange rates, global trade, just in time inventories, consumer computers, software, the Internet, ECNs and much more. I used to prepare tax returns with pencil and paper and compare that to now. We are in a different world and productivity is to be rewarded. Not stolen by the government with a replace transaction tax, to put us back in the ice age.
Are you ready to wear go go boots again too?
Sorry Traderjb, see you answered this nicely too, agree with you as well.
In every case that there was some form of securties tax....the market makers were always exempt....both in the past and currently....
The reason is very simple....if no one is there to make the market then there is no market....
The marketplace today has changed in that ECNs have taken the place of marketmakers to a large degree....
It is the RETAIL user of ECNs that has taken a high percentage of the market share away from market makers....
So the effect of a tax would be to eliminate the RETAIL user of ECNs which have taken market share from market makers....thus giving back market share of the market making function solely to dedicated market makers....
It was the retail sector that created the ECNs in order that a person via a PC could post between the market maker bid ask spread....
The big banks are the core dedicated market makers....and will be granted a tax exemption because there needs to be a market for securities....
Again....no market making function...no market....Thus their exemption is a given....as has always been the case.....and still is the case for all markets ....ie market makers do not pay a stamp duty....RETAIL pays the stamp duty....
So the purpose of the tax was to make the big banks pay a tax to help pay for TARP ....
The proposed transaction tax will end up only taxing RETAIL traders who have made the markets more efficient via ECNs....
So what happens is that the bid ask will widen....volume will drop by about 70% or more....and a lot of stocks may have 3 to 10% bid ask spreads.....
And very simply....the big banks will not pay a dime of this tax because all markets have to have market making functions.....or there is no marketplace....and market making WILL BE EXEMPT AS IT CURRENTLY IS FOR THOSE THAT HAVE IT....OR SOME FORM IE THE STAMP TAX.....
The initial effect of the tax will be a drop of several $Trillion in stock market valuations because a large part of the current marking making is being done in the RETAIL sector via ECNs....This demand will be eliminated....
And the big banks will pay $0....understand this yet ? $0....
And the POLYs are telling the populist driven public just the opposite....
This is because the politicians have no securities background whatsoever.....nor do the poly economists.....Do yourself a favor....review the wiki bios of the politicians who are proposing these taxes.....They have zero experience or background in the securities business.....and they are not qualified on the matter....
It is as simple as that....
The reason is very simple....if no one is there to make the market then there is no market....
The marketplace today has changed in that ECNs have taken the place of marketmakers to a large degree....
It is the RETAIL user of ECNs that has taken a high percentage of the market share away from market makers....
So the effect of a tax would be to eliminate the RETAIL user of ECNs which have taken market share from market makers....thus giving back market share of the market making function solely to dedicated market makers....
It was the retail sector that created the ECNs in order that a person via a PC could post between the market maker bid ask spread....
The big banks are the core dedicated market makers....and will be granted a tax exemption because there needs to be a market for securities....
Again....no market making function...no market....Thus their exemption is a given....as has always been the case.....and still is the case for all markets ....ie market makers do not pay a stamp duty....RETAIL pays the stamp duty....
So the purpose of the tax was to make the big banks pay a tax to help pay for TARP ....
The proposed transaction tax will end up only taxing RETAIL traders who have made the markets more efficient via ECNs....
So what happens is that the bid ask will widen....volume will drop by about 70% or more....and a lot of stocks may have 3 to 10% bid ask spreads.....
And very simply....the big banks will not pay a dime of this tax because all markets have to have market making functions.....or there is no marketplace....and market making WILL BE EXEMPT AS IT CURRENTLY IS FOR THOSE THAT HAVE IT....OR SOME FORM IE THE STAMP TAX.....
The initial effect of the tax will be a drop of several $Trillion in stock market valuations because a large part of the current marking making is being done in the RETAIL sector via ECNs....This demand will be eliminated....
And the big banks will pay $0....understand this yet ? $0....
And the POLYs are telling the populist driven public just the opposite....
This is because the politicians have no securities background whatsoever.....nor do the poly economists.....Do yourself a favor....review the wiki bios of the politicians who are proposing these taxes.....They have zero experience or background in the securities business.....and they are not qualified on the matter....
It is as simple as that....
The SEC is slated to come out with a paper on HFT in Janaury (I believe) which may have some recommendations (even actions) to take against HFT (if any). This will be something for us to keep an eye on as well (what the sec says).
Considering that up to 70% of the volume traded is from HFT (from what I've read) a trans tax would knock that 70% out of the game immediately. So there goes all the revenue these morons think they would be getting.
-Guru
"Potential and Unintended Consequences of the Financial Transacton Tax"
http://www.advancedtrading.com/regulations/showArticle.jhtml?articleID=222002855
-Guru
http://www.advancedtrading.com/regulations/showArticle.jhtml?articleID=222002855
-Guru
I really think we need to come up with someway to debunk the myth that this tax is going to generate 150b or whatever number their touting now. This is all about raising revenue now. They may say it's getting back at Wall Street to try and fuel some populist rage but let's face it the us is broke.
This report out from Dean Baker says that even if volume were to drop 50% the tax would still raise 177b or so. We know this isn't true and that volume would probably drop a lot more. But how do we get this info out there to counteract these outrageous claims?
Thousands (maybe hundred of thousands) of jobs would be loss if this tax were enacted (think trickle down effect). All those job losses would result in lost tax revenue. Not to mention an increase in unemployment costs to the govt as all these newly unemployed folks can't find new jobs. Etc, Etc...
-Guru
This report out from Dean Baker says that even if volume were to drop 50% the tax would still raise 177b or so. We know this isn't true and that volume would probably drop a lot more. But how do we get this info out there to counteract these outrageous claims?
Thousands (maybe hundred of thousands) of jobs would be loss if this tax were enacted (think trickle down effect). All those job losses would result in lost tax revenue. Not to mention an increase in unemployment costs to the govt as all these newly unemployed folks can't find new jobs. Etc, Etc...
-Guru
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First none of these propositions cooked up by these polys are done by people who are knowledgable about the securities business....They have no clue as to what they are talking about....
When you see a name of a jouralist or poly making such nonqualified statements.....just simply review their bios on wiki.....In every case they will have no record of securtiies experience whatsoever....none of them....no exceptions....
Don't underestimate the desperation of government in the need for funds. I was watching CSPAN 3 today and they had that question and answer session for the Peterson-Pew Commission on Budget Reform. One of the commissioners, Alice Rivlin, said essentially that all revenue gathering mechanisms are on the table. What's interesting was that there was a question about Medicare cutbacks and whether that would happen. The folks at the table acknolwedged that they were skeptical on it happening and that an alternative to meet that hole had to come in. Rivlin (I believe, check the video below) said (paraphrasing here) that a Value-Added Tax or Sales tax might be needed. I keep saying, if we get hit with this transaction tax, don't be surprise if it comes in from health care or some climate related act. If Congress slaps a VAT, the average person will be pissed and "want justice." Guess who will be the scape goat and target of more so-called populist ire? That's when we get hit.
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You are very astute in never underestimating the sheer stupidity of the polys in making everything that they touch ...TURN INTO SHIT.....
The reason for this is very simple....
THEY ARE NOT QUALIFIED.....THAT SIMPLE....FUCKING MORONS WITH EGOS....