1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
Sounds like a different kind of FTT (a tax on paying bills online, etc). They also want to tax internet activity. Is there anything these corrupt groups don't want to tax? What a joke. I sure hope I never see the day of a 'global tax.'
-Guru
A transactions tax is "intellectually honest".
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/14/AR2010011404620.html
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/14/AR2010011404620.html
Hopefully these kind of articles just die out and go away. I sure hope they do if and when this banking levy takes hold. Enough with the transaction tax stuff already - the admin has kicked it to the curb
-Guru
The UK was the first to show courage of leadership in saving its banks with a bailout and the US soon followed suit with its own TARP bailout.
Now, when it came time â on a political clock that is â for getting bailouts paid back to taxpayers (voters), the UK acted first again. Once again, the US followed suit soon thereafter. The UK has a Prime Minister election in spring 2010 and the US midterms are in November.
The UK chose its preferred poison (method) a âbanker bonus tax.â Many UK-based banks, including some US banks countered by making internal-arrangements to share the bonus tax across their worldwide bonus pools, and by directly covering the bonus tax, thereby further shielding their employees. After all, no bank wants to lose vital employees over these inconsistent and unfortunate after-the-fact government populist attacks.
As the UK was launching their banker bonus tax in late 2009, the White House had already decided â per a NY Times article today â that it was doing a similar thing and that it was clearly not going to do a financial-transaction tax. Wow, had we known that we could have saved hundreds of hours of time not fighting the financial-transaction tax.
The US preferred method was a more general TARP âbank taxâ fee assessed on only the largest financial institutionâs non-FDIC-covered-already liabilities. Plus, in the final stages the US also learned from the UK experience, with UK banks shielded their bonus recipients. So the US must have figured, why not keep it simpler with a liability tax. Itâs less attacking of employees receiving bonuses, which is better politics for later fund raising on Wall Street. Plus, itâs easier to sell to banks and the public as being like an insurance premium for moral hazard (ultimate government back stop) on uninsured assets, or as a surcharge on zero interest rates â and how can that be argued with?. For all intensive purposes, the US and UK bank taxes are very similar.
The big difference between the US and UK bank taxes versus a much wider financial-transaction tax, is that the later falls greatly on consumers, investors and farmers and not on the intended and rightful target banks themselves. The US and UK wanted banks to pay back bank bailouts without the further help of Main Street. Not for Main Street to pay back bank bailouts for Wall Street, as would be the case with a financial-transaction tax.
Now that the two world leaders in financial services and exchanges US (Wall Street) and UK (The City) have shown leadership in taking concrete action, whatâs the rest of the world going to do?
To support the UK embattled PM Brown when he enacted the banker bonus tax, French President Sarkozy said France would soon follow UK in lock step with the UK. Nothing has happened yet, which is not unexpected coming from President Sarkozy, a big talker on the world stage.
German Chancellor Merkel also quickly supported PM Brown, but she was checked by her minority-government-sharing FDP government minister who said a banker bonus tax would be illegal under German law. That same FDP minister is also blocking Merkelâs support of a financial transaction tax too.
I think in order to be diplomatic to the EU, the IMF flip-flopped and said it would consider a financial-transaction tax after PM Brown cried foul after the G-20 in Scotland when Secretary Geithner said the US would not support a financial-transaction tax and preferred a bank levy or tax. The IMF just came out this week in full support of the US administrations bank tax plan. Again, the IMF appeared to be in lock step with Secretary Geithner all along.
Whatâs next? The IMF is expected to issue its formal report supporting a bank levy or tax over a financial-transaction tax in April or no later than June. Then no G-20 country will have grounds to call for a global financial-transaction tax. The problem remains, pass a financial-transaction tax in one country and transactions will quickly move to non-taxing countries. Itâs much harder to move actual bankers and why move from NYC over a 15-point basis charge (the bank bonus tax amount)?
So should we get worried when people keep calling for a financial-transaction tax? No, they are crying wolf with no realistic chances of passage. Hereâs why they are doing it.
Continued talk of a financial-transaction tax seems pointless in the US and UK now that the banks are paying all last vestiges of TARP bailouts back with the UK bank bonus tax and US bank tax. A financial-transaction tax would be double or even triple-taxation and thatâs beyond the pale.
But what about in France and Germany, where they have not yet chosen their preference for charging banks for bailouts? Could they choose the financial-transaction tax instead of a banker bonus tax or bank tax?
German Chancellor Merkel may keep the flames going on a financial-transaction tax because Germany probably canât choose a banker bonus tax or a bank tax, as the FDP minister says the first is illegal and maybe second one too? Merkel doesnât have the political capital and majority â with this power sharing agreement - that President Obama has to act on a budget initiative unilateral way. Plus, Merkel is not desperate like UK PM Brown facing a losing election no later than spring 2010.
Continued talk of a financial transaction tax by Merkel is nothing more than a delaying tactic in my view. Besides the (fuzzy) legal issues in Germany, and FDP minority blocking power stated, German banks are very powerful in German politics, corporations and even unions too. German media has reported cooperation between Merkel and German banks to attract banking business to Germany and German banks while the UK and US attack their own banks.
Itâs similar in France too. Whatâs President Sarkozy going to do? Probably continue to talk about a financial-transaction tax â that is highly unexpected to happen in France or EU â in order to placate global charity organizations, where France plays a big role. I also doubt that Sarkozy will move quickly to heap a huge tax on French banks, which like in Germany play an outsized role in politics, corporations and unions.
So hereâs the million dollar question for traders? Where do we stand on the financial-transaction tax now?
I think we are back to where I said all along with slim chance of passage. Merkel and Sarkozy may continue to plug a financial-transaction tax but again I see this as a delaying tactic to punt on taxing their banks to reap some competitive advantage.
Other proponents of this tax will continue to be progressive-left and union battle cries against banks and traders (in the US and UK even after the bank taxes) and with charities very hungry for desperate financing â considering charitable contribution cut-backs during this harmful recession. Calls for global charity are not a good enough reason to level huge taxes on industry with many unintended consequences. Other forms of financing for charity are a better idea. Speaking of that, please donate to Haiti relief efforts.
Now, when it came time â on a political clock that is â for getting bailouts paid back to taxpayers (voters), the UK acted first again. Once again, the US followed suit soon thereafter. The UK has a Prime Minister election in spring 2010 and the US midterms are in November.
The UK chose its preferred poison (method) a âbanker bonus tax.â Many UK-based banks, including some US banks countered by making internal-arrangements to share the bonus tax across their worldwide bonus pools, and by directly covering the bonus tax, thereby further shielding their employees. After all, no bank wants to lose vital employees over these inconsistent and unfortunate after-the-fact government populist attacks.
As the UK was launching their banker bonus tax in late 2009, the White House had already decided â per a NY Times article today â that it was doing a similar thing and that it was clearly not going to do a financial-transaction tax. Wow, had we known that we could have saved hundreds of hours of time not fighting the financial-transaction tax.
The US preferred method was a more general TARP âbank taxâ fee assessed on only the largest financial institutionâs non-FDIC-covered-already liabilities. Plus, in the final stages the US also learned from the UK experience, with UK banks shielded their bonus recipients. So the US must have figured, why not keep it simpler with a liability tax. Itâs less attacking of employees receiving bonuses, which is better politics for later fund raising on Wall Street. Plus, itâs easier to sell to banks and the public as being like an insurance premium for moral hazard (ultimate government back stop) on uninsured assets, or as a surcharge on zero interest rates â and how can that be argued with?. For all intensive purposes, the US and UK bank taxes are very similar.
The big difference between the US and UK bank taxes versus a much wider financial-transaction tax, is that the later falls greatly on consumers, investors and farmers and not on the intended and rightful target banks themselves. The US and UK wanted banks to pay back bank bailouts without the further help of Main Street. Not for Main Street to pay back bank bailouts for Wall Street, as would be the case with a financial-transaction tax.
Now that the two world leaders in financial services and exchanges US (Wall Street) and UK (The City) have shown leadership in taking concrete action, whatâs the rest of the world going to do?
To support the UK embattled PM Brown when he enacted the banker bonus tax, French President Sarkozy said France would soon follow UK in lock step with the UK. Nothing has happened yet, which is not unexpected coming from President Sarkozy, a big talker on the world stage.
German Chancellor Merkel also quickly supported PM Brown, but she was checked by her minority-government-sharing FDP government minister who said a banker bonus tax would be illegal under German law. That same FDP minister is also blocking Merkelâs support of a financial transaction tax too.
I think in order to be diplomatic to the EU, the IMF flip-flopped and said it would consider a financial-transaction tax after PM Brown cried foul after the G-20 in Scotland when Secretary Geithner said the US would not support a financial-transaction tax and preferred a bank levy or tax. The IMF just came out this week in full support of the US administrations bank tax plan. Again, the IMF appeared to be in lock step with Secretary Geithner all along.
Whatâs next? The IMF is expected to issue its formal report supporting a bank levy or tax over a financial-transaction tax in April or no later than June. Then no G-20 country will have grounds to call for a global financial-transaction tax. The problem remains, pass a financial-transaction tax in one country and transactions will quickly move to non-taxing countries. Itâs much harder to move actual bankers and why move from NYC over a 15-point basis charge (the bank bonus tax amount)?
So should we get worried when people keep calling for a financial-transaction tax? No, they are crying wolf with no realistic chances of passage. Hereâs why they are doing it.
Continued talk of a financial-transaction tax seems pointless in the US and UK now that the banks are paying all last vestiges of TARP bailouts back with the UK bank bonus tax and US bank tax. A financial-transaction tax would be double or even triple-taxation and thatâs beyond the pale.
But what about in France and Germany, where they have not yet chosen their preference for charging banks for bailouts? Could they choose the financial-transaction tax instead of a banker bonus tax or bank tax?
German Chancellor Merkel may keep the flames going on a financial-transaction tax because Germany probably canât choose a banker bonus tax or a bank tax, as the FDP minister says the first is illegal and maybe second one too? Merkel doesnât have the political capital and majority â with this power sharing agreement - that President Obama has to act on a budget initiative unilateral way. Plus, Merkel is not desperate like UK PM Brown facing a losing election no later than spring 2010.
Continued talk of a financial transaction tax by Merkel is nothing more than a delaying tactic in my view. Besides the (fuzzy) legal issues in Germany, and FDP minority blocking power stated, German banks are very powerful in German politics, corporations and even unions too. German media has reported cooperation between Merkel and German banks to attract banking business to Germany and German banks while the UK and US attack their own banks.
Itâs similar in France too. Whatâs President Sarkozy going to do? Probably continue to talk about a financial-transaction tax â that is highly unexpected to happen in France or EU â in order to placate global charity organizations, where France plays a big role. I also doubt that Sarkozy will move quickly to heap a huge tax on French banks, which like in Germany play an outsized role in politics, corporations and unions.
So hereâs the million dollar question for traders? Where do we stand on the financial-transaction tax now?
I think we are back to where I said all along with slim chance of passage. Merkel and Sarkozy may continue to plug a financial-transaction tax but again I see this as a delaying tactic to punt on taxing their banks to reap some competitive advantage.
Other proponents of this tax will continue to be progressive-left and union battle cries against banks and traders (in the US and UK even after the bank taxes) and with charities very hungry for desperate financing â considering charitable contribution cut-backs during this harmful recession. Calls for global charity are not a good enough reason to level huge taxes on industry with many unintended consequences. Other forms of financing for charity are a better idea. Speaking of that, please donate to Haiti relief efforts.
After my last post earlier tonight, I just noticed this article in the WSJ
http://online.wsj.com/article/SB100...05211928270140.html?mod=WSJ_hps_LEFTWhatsNews
LONDONâEuropean countries signaled Friday they aren't likely to follow the U.S. government's lead and introduce a tax on banks' liabilities to cover the cost of financial bailouts.
But some reiterated their support for a global transactions levy to raise funds for future crises.
The proposed new U.S. bank tax makes it far less likely that governments around the world will agree on such a global levy because the U.S. won't want to place yet a further financial toll on its banks, regulatory experts said. For their part, European governments likely are cool toward the U.S. tax because of its potential impact on lending at a time of slow economic growth.
"I think it does make it less likely because I can't see a global transaction tax without the U.S. joining it and, having gone down this route [of a tax on liabilities], the U.S. is probably less likely to add another tax," said John Hitchins, U.K. banking leader at PricewaterhouseCoopers LLP...........
Green comment: As figured, the Euros are not going to squeeze their banks and seek a competitive edge. Just more jawboning on a financial-transaction tax which they also indicate won't happen now with the US opting out.
http://online.wsj.com/article/SB100...05211928270140.html?mod=WSJ_hps_LEFTWhatsNews
LONDONâEuropean countries signaled Friday they aren't likely to follow the U.S. government's lead and introduce a tax on banks' liabilities to cover the cost of financial bailouts.
But some reiterated their support for a global transactions levy to raise funds for future crises.
The proposed new U.S. bank tax makes it far less likely that governments around the world will agree on such a global levy because the U.S. won't want to place yet a further financial toll on its banks, regulatory experts said. For their part, European governments likely are cool toward the U.S. tax because of its potential impact on lending at a time of slow economic growth.
"I think it does make it less likely because I can't see a global transaction tax without the U.S. joining it and, having gone down this route [of a tax on liabilities], the U.S. is probably less likely to add another tax," said John Hitchins, U.K. banking leader at PricewaterhouseCoopers LLP...........
Green comment: As figured, the Euros are not going to squeeze their banks and seek a competitive edge. Just more jawboning on a financial-transaction tax which they also indicate won't happen now with the US opting out.
Thank you GreenTraderTax WSJ has some good articles protesting the bank tax. I Commented on several. Here is one link http://online.wsj.com/article/SB100...ml?mod=article-outset-box#articleTabs=article - The 'Responsibility' Tax
Fannie and Freddie are exempt from the White House banker 'fee.'
I tried to lighten it up a little with my reply. Of course lots of people are upset over this direction. Unfortunately, their pain is our gain.
-----------------------------------------
Uncle Sam asks Wall Street for a big bonus. Boil down this story to Wall-Street bonus talk.
Taxpayers did not bailout banks or anyone else. American taxpayers can not even bail out themselves. Most populist rants come from "tax takers" people who get more government benefits than they pay for in taxes. The government bailouts were floated with printed money and debt and the banks did an excellent job in paying back TARP with dividends. The Fed made a 45 billion profit on the toxic assets it exchanged for cash with Wall Street in the bailout. Wall Street and DC worked well together thanks to Secretary Paulson and Geithner in saving the system. So that's my Republican credentials and now let me explain why the President's budget deal for a bank levy is a great deal for all involved, the government, the banks and taxpayers too.
Let's pick up this story at bonus time, happy time for New Yorkers of all condo-pin-stripes. It's late January, bonus time for bankers, with managers looking back a year, to do an accounting of performance and value, to see who made what returns on what instruments or deals, etc. Well, first our biggest thanks to traders, since they made most of those bank profits. After-all, it was hard to lend money to businesses facing failure or downsizing, and overextended consumers. It was hard to lend money to residential and commercial real estate developers. It was hard to finance a private equity deal or execute a merger and acquisition. It was almost impossible to package new CDO loans as securities. Take away trading from a bank and you have a losing bank and that is a stupid idea! Trading gains are meant to cushion banks during loan loss years. Back to our bonuses. Traders should get high bonuses and the others not as much.
Wait, did we leave someone out? Uncle Sam just showed up at our door saying he represents taxpayers and TARP and they want a bonus too. The nerve! But, wait lets review Uncle Sam's performance with the same metrics we review our other value players in the bank. And first, how much is Uncle Sam even asking for? 15-basis points. Well that doesn't sound too bad, not even as much as my bar bill at the club as CEO. But wait 15 basis points on what? On all outstanding assets invested and traded and financed with debt? Are you out of your mind? Okay, wait a minute; let's see what the loan rates were on that underlying debt and who the lenders were. Oh, many of the loans came from Uncle Sam, so are you now asking for a surcharge interest rate on those loans? The nerve. Oh, the interest rate was zero and it was pretty much free money from the Fed. Why was that? Oh, we were under crisis meltdown conditions and I was facing significant financial problems and may have incurred several billion dollar losses on our toxic assets. Oh, you let me trade in those illiquid toxic assets for free cash that I could fast trade with to simply trend-trade the market's to recovery.
Well considering all those special circumstances and clear values and performance, I guess your bonus request for 15 basis points over 10 years is a fair request. Good news, we checked with our board and they said it's a small item on our overall business plan; the markets have already factored it in to our stock price which is only headed up - if we don't have more significant loan losses. Our PR people like this "responsibility fee" too. We are considering it a sponsorship of America instead of Tiger Woods. But wait a minute, are we going to be paying taxes twice now, if you call that a tax too? Oh, you let us keep our huge NOLs to offset future taxes? Wow, didn't realize deferred NOL tax benefits account for one third of Citi's capital too?
But what about too-big-to fail and moral hazard? Can we consider this 15-basis point bonus to Uncle Sam, our lender of last resort, coverage for any needed back stops in the future? Are you going to restrict our leverage, because if you do, we may move some trading offshore? No major new restrictions, good. Are you going to go overboard on financial reform? Oh, Chris Dodd said maybe no consumer financial protection authority, good. Are you going to let Congress get out of control with bonus taxes and a financial-transaction tax? Oh, no good. Do we have to pay for a government back stop with an extra insurance premium? Yes, maybe a little more to the FDIC but consider that 15-basis point fee also your insurance premium for moral hazard government back stops too.
Wait a minute, why are you letting the GSEs Freddie and Fannie and big-autos off the hook here? Oh, they don't have huge profits so no bonuses? Oh, they did not get free money from the Fed to trade with for huge trading gains? But they did get a government backstop. So please remember to ask them for some concessions down the road too. Maybe give us the investment banking chance to green America and green the auto industry. That might make up for things too.
Glad we had this bonus talk. Yes, this bonus fee to government is obscene, past year CEO-like, but you did earn it just like the rest of our bankers did too. In that case, let's all stop throwing stones (from glass houses) and get on with our business. We have lots to accomplish in the year ahead. The recovery is fragile and we are just at the stage when a Wall Street and stock market recovery are telecasting a Main Street recovery. Now is not the time to let angry and disruptive populists on either side of the aisle derailing us? We are one-America as the President always says and not a Tale of Two Cities. We bankers will do our job to sell America's promise/debt around the world and we all need to keep lower interest rates in tact without inflation based on recovery, deficit reduction and solving our problems together. This recovery will lift all boats and toxic assets will become healthier again. Let's keep working nicely together!
Fannie and Freddie are exempt from the White House banker 'fee.'
I tried to lighten it up a little with my reply. Of course lots of people are upset over this direction. Unfortunately, their pain is our gain.
-----------------------------------------
Uncle Sam asks Wall Street for a big bonus. Boil down this story to Wall-Street bonus talk.
Taxpayers did not bailout banks or anyone else. American taxpayers can not even bail out themselves. Most populist rants come from "tax takers" people who get more government benefits than they pay for in taxes. The government bailouts were floated with printed money and debt and the banks did an excellent job in paying back TARP with dividends. The Fed made a 45 billion profit on the toxic assets it exchanged for cash with Wall Street in the bailout. Wall Street and DC worked well together thanks to Secretary Paulson and Geithner in saving the system. So that's my Republican credentials and now let me explain why the President's budget deal for a bank levy is a great deal for all involved, the government, the banks and taxpayers too.
Let's pick up this story at bonus time, happy time for New Yorkers of all condo-pin-stripes. It's late January, bonus time for bankers, with managers looking back a year, to do an accounting of performance and value, to see who made what returns on what instruments or deals, etc. Well, first our biggest thanks to traders, since they made most of those bank profits. After-all, it was hard to lend money to businesses facing failure or downsizing, and overextended consumers. It was hard to lend money to residential and commercial real estate developers. It was hard to finance a private equity deal or execute a merger and acquisition. It was almost impossible to package new CDO loans as securities. Take away trading from a bank and you have a losing bank and that is a stupid idea! Trading gains are meant to cushion banks during loan loss years. Back to our bonuses. Traders should get high bonuses and the others not as much.
Wait, did we leave someone out? Uncle Sam just showed up at our door saying he represents taxpayers and TARP and they want a bonus too. The nerve! But, wait lets review Uncle Sam's performance with the same metrics we review our other value players in the bank. And first, how much is Uncle Sam even asking for? 15-basis points. Well that doesn't sound too bad, not even as much as my bar bill at the club as CEO. But wait 15 basis points on what? On all outstanding assets invested and traded and financed with debt? Are you out of your mind? Okay, wait a minute; let's see what the loan rates were on that underlying debt and who the lenders were. Oh, many of the loans came from Uncle Sam, so are you now asking for a surcharge interest rate on those loans? The nerve. Oh, the interest rate was zero and it was pretty much free money from the Fed. Why was that? Oh, we were under crisis meltdown conditions and I was facing significant financial problems and may have incurred several billion dollar losses on our toxic assets. Oh, you let me trade in those illiquid toxic assets for free cash that I could fast trade with to simply trend-trade the market's to recovery.
Well considering all those special circumstances and clear values and performance, I guess your bonus request for 15 basis points over 10 years is a fair request. Good news, we checked with our board and they said it's a small item on our overall business plan; the markets have already factored it in to our stock price which is only headed up - if we don't have more significant loan losses. Our PR people like this "responsibility fee" too. We are considering it a sponsorship of America instead of Tiger Woods. But wait a minute, are we going to be paying taxes twice now, if you call that a tax too? Oh, you let us keep our huge NOLs to offset future taxes? Wow, didn't realize deferred NOL tax benefits account for one third of Citi's capital too?
But what about too-big-to fail and moral hazard? Can we consider this 15-basis point bonus to Uncle Sam, our lender of last resort, coverage for any needed back stops in the future? Are you going to restrict our leverage, because if you do, we may move some trading offshore? No major new restrictions, good. Are you going to go overboard on financial reform? Oh, Chris Dodd said maybe no consumer financial protection authority, good. Are you going to let Congress get out of control with bonus taxes and a financial-transaction tax? Oh, no good. Do we have to pay for a government back stop with an extra insurance premium? Yes, maybe a little more to the FDIC but consider that 15-basis point fee also your insurance premium for moral hazard government back stops too.
Wait a minute, why are you letting the GSEs Freddie and Fannie and big-autos off the hook here? Oh, they don't have huge profits so no bonuses? Oh, they did not get free money from the Fed to trade with for huge trading gains? But they did get a government backstop. So please remember to ask them for some concessions down the road too. Maybe give us the investment banking chance to green America and green the auto industry. That might make up for things too.
Glad we had this bonus talk. Yes, this bonus fee to government is obscene, past year CEO-like, but you did earn it just like the rest of our bankers did too. In that case, let's all stop throwing stones (from glass houses) and get on with our business. We have lots to accomplish in the year ahead. The recovery is fragile and we are just at the stage when a Wall Street and stock market recovery are telecasting a Main Street recovery. Now is not the time to let angry and disruptive populists on either side of the aisle derailing us? We are one-America as the President always says and not a Tale of Two Cities. We bankers will do our job to sell America's promise/debt around the world and we all need to keep lower interest rates in tact without inflation based on recovery, deficit reduction and solving our problems together. This recovery will lift all boats and toxic assets will become healthier again. Let's keep working nicely together!