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

I posted a little parody dialog of their video in the guardian comments...LOL:

"I'm a private market maker ( I know, you hate me because of my rented appartment, my citroen C3 and my yearly 100000 EUR because I have been at it for almost ten years working 12 Hours per day... ) and I could make the exact same inverse video, preferably starring a hippie:

- Me : So, Mr Tobin supporter, an average market maker which is the person who provides liquidity to the market place, have approximately a 0.01 % profit margin on derivatives and a 0.05% one on stock, what do you think they will do if you apply a tax of 0.05% on their activity?

- TT supporter : Uh well, they should...well... adapt.

-Me : How? Instead of making 0.01% on a transaction, I suddenly lose 0.04%.

-TT supporter : You have to ... well ... do it differently.

-Me : I will help you. I have 2 possibilities. One is I stop doing it.I let you guess the second.

-TT Supporter : Mh ...Mh... Dunno

-Me : I increase my spreads by at least the rate of the tax to transfer the cost to the end user. Instead of quoting 0.03% spreads to make 0.01% on average, I will quote 0.07% spreads to make 0.01%, and who will pay on the other side?

- TT Supporter : The SPECULATOR

- Me : Not even close... In the markets, market TAKERS are pension funds, little investors, hedgers, end users with economic value ... They are the only one paying the stamp tax currently in the UK, not the banks and it will be the same indirectly with the Tobin...

-TT Supporter : Um well, but ... The celebrities didn't talk about that

-Me : Madonna has spent so much time in the city working tax efficiency, she should know that...LOL"

PS : Some things are not true in the first paragraph but close to reality though
 
Quote from TraDaToR: Surprisingly no coverage in the french newspapers.[/B]
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...and not surprisingly - so far no coverage by the BBC's (at least by the influential stations such as Radio 4)... No oxygen - no fire. They needed those billboards badly, because they have been effectively barred from the mainstream media (which used to be champagne socialist as well, but saw through the ulterior motives of the Brown's many Tobin tax campaigns such as this one).

Such a loss of charitable money! Did their benefactors really want to sponsor media campaigns fuelled by lack of forgiveness and envy for material goods or are they more into selfless, spontaneous giving to the less fortunate members of the society? Which should be a sponeaneous impulse to count as a good deed. Making it compulsory completely invalidates the idea of charity. It becomes tax.

I'm not surprised with the (pre-election) timing though. Who gains if the NGO sector becomes auto-financed from compulsory taxation? The heavily indebted government - they will be able to redirect money from social causes to service debt. But if charities become part of the government's ministry of spending, isn't it an outright nationalization of the "charitable industry"? Did nationalization lead to efficiencies in any industry?

It is definitely an attempt to raise taxes by stealth, dear Brits! Taxes on "regular people like you and me"...
http://en.wikipedia.org/wiki/Tobin_...investors_.27like_you_and_me.27_would_lose.22

And remember, you are already paying this tax once - it is called Stamp Duty Reserve Tax - a tax on shares and securities when you buy through the stock market or a stock broker : http://www.hmrc.gov.uk/so/index.htm
 
The Robin Hood Tax is gently mocked in a blog in the Telegraph today:

http://blogs.telegraph.co.uk/news/t...hood-tax-is-a-terrible-i-mean-brilliant-idea/

A Robin Hood Tax is a terrible … I mean brilliant idea

By Toby Young

Bill Nighy and his chums have picked an odd time to launch their proposal for a new tax on bankers. Among other things, the Robin Hood Tax would be used to “fund crucial action against climate change”. Like what, exactly? A PR campaign to restore the battered reputation of the IPCC? A bail out for Toyota so it can continue to make its defective ecoboxes?

The idea is to tax all bank transactions not involving members of the public by approximately 0.05 per cent and use the resulting revenue “to tackle poverty and climate change”. In a previous incarnation it was known as the Tobin Tax — a tax on currency transactions proposed by the economist James Tobin — and before that as a financial transaction tax.

There are several problems with this proposal. First of all, it’s entirely possible that the cost of collecting a tax of 0.05 per cent would be greater than the amount of revenue it raised. Then there’s the issue of who would decide how the money would be spent. Gordon Brown? On the website set up to promote the new tax, it states that some of the money could be spent on schools. Does that mean I could apply for a grant to help me set up the free school I’m trying to start in Acton? I doubt it.

But the real problem with a financial transaction tax — the reason it has never been introduced and never will be — is that no country is going to impose it unilaterally for fear of placing its own banking sector at a competitive disadvantage. If Britain introduced a Robin Hood Tax, for instance, the international banks that are headquartered here would simply relocate to a country in which their transactions aren’t taxed. And, of course, the Prisoner’s Dilemma dictates that the probability of every country in the world adopting the Robin Hood Tax are vanishing to zero. (See the Kyoto Protocol.)

In the video (directed by Richard Curtis, naturally) Nighy plays a banker who squirms under the interrogation of a faceless do-gooder and comes up with less and less convincing reasons for not adopting the tax. In fact, the public position of every senior British banker on this will be exactly the same as that of Gordon Brown, Angela Merkel, Nicolas Sarkozy and every other head of state, which is to announce that it’s an excellent idea and they’re four square behind it. Such support costs them nothing since they know it will never be implemented.

So that’s my line. The Robin Hood Tax is a terrible brilliant idea. Britain should adopt it just as soon as every other country in the world does.
 
Quote from ZeroSigma: ...so far no coverage by the BBC
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There was some coverage on their flagship station (Radio 4): Not part of headlines, by any means. Merely a 3 minute interview with Bill Nighy pushed to the second half hour of their hour-long evening news programme called PM ( http://www.bbc.co.uk/programmes/b00qgsg9 , starting at around 38 min.).

The actor:

- plugged their website,

- repeated the mantra that only speculative transactions that "do not involve members of the public" will be taxed (we anticipated this already, so Wikipedia was prepared for this, see the "regular investors like you and me" section)

- claimed that such a small tax would be enough to deter speculation "you and others like you don't like" (this is refuted by research on volatility, amply provided on Wikipedia - good question from the interviewer),

- claimed that it could not be pass-through, because it would be "regulated so no-one's savings/pensions would be at risk), which was easily refuted by Prof. Malkiel's WSJ article, also cited on the Wikipedia,

- said that the "symmetry is sweet given that the banks have been bailed out to the tune of $9T - they would get to atone for the damage they caused" (a pure revenge argument, bad PR for charities),

- said that "most" of that banking activity is "of no value socially" (an anti-free-market argument if there ever was one),

- did not accept the argument that an international acceptance is necessary to make it "work effectively", i.e. to prevent tax avoidance (this can be easily verified as false, e.g. on the Wikipedia page in Prof. Simons interview: "if they do it at the full G20 level, they might get some traction" vs. actor's: "Were it only a handful of countries, it would be still very effective, were it only the UK, we would still have 10's of billions of pounds " - actually they have GPB3bn anually, as per Institute of Fiscal Studies and Oxera reports).

- the actor also said "these are hard-core economic minds", "not a bunch of hippies" who endorse the idea. Actually "they" are just 2 guys: Dr. Baker (with a bit more than no published peer-reviewed papers), and Dr. Spratt (a visiting lecturer at the Reading University) vs. dozens of peer-reviewed research papers stating that the Tobin-style taxes did not work in practice as intended, neither volatility-wise nor revenue-wise (most of them we quoted on the Wikipedia page). I'm glad they are (mis)using Tobin's name - this is the main article, despite Reimer's efforts to create 2 other, biased ones (on CTT and FTT, over which he rules alone).

Then we had the Robin Hood clip almost repeated live on air: a much less eloquent and much shorter defense (1 min. only) put up on our behalf by the editor of "The Banker" (starting at 45 mins). But actually that was good news for us: in fact, the interviewer did not attack Mr. Banker at all, in stark contrast to the treatment the actor received earlier (there were only 2 questions, one of them clearly "leading": "What do you think of it?" and "But the tax you think is ... naive?")

Eariler we had some copy-paste editing on the BBC website (http://news.bbc.co.uk/2/hi/business/8506718.stm ):
"The tax, named after the Nobel Prize-winning economist James Tobin, was originally designed to raise funds for developing nations"
vs. truth: "Lipsky pointed out that Tobin’s specific proposal was restricted to foreign exchange transactions, and was intended to suppress transactions, rather than to raise revenue." (see: http://www.imf.org/external/pubs/ft/survey/so/2009/NEW120109A.htm )

Another suggestively used phrase "backed by the IMF" is probably taken straight from PR material, such a pity it ended up on the BBC website: - "The call was backed by [..] the International Monetary Fund (IMF) at WEF's gathering in Davos." [citation needed] Yes, the traditional media should really try to implement internally some Wikipedia editing policies... I still can't forget that double-barrel falshood in their "*Small* tax on *bank* transactions" headline... but overall, good job BBC! Naive Mr. Robin Hood (i.e. Brown) was indeed... (and I shouln't have been so naive to use that catchphrase "if you are working for Robin Hood" either. Never know who might be listening;)
 
Here's my final edited blog article on this subject.

UK charities are teaming with UK celebrities and economists to promote a Robin Hood tax on banks.

A new campaign has launched — here’s the initial press from London:

http://robinhoodtax.org/

www.thisislondon.co.uk/standard/art...-raise-pound-250bn-a-year-to-fight-poverty.do

www.telegraph.co.uk/finance/newsbys...play-my-part-in-the-great-Robin-Hood-Tax.html

Since when do charities and celebrities set tax policy? Churches already raise lots of money, but there is supposed to be a clear “separation of church and state” (tax policy) http://en.wikipedia.org/wiki/Separation_of_church_and_state .

When you think of celebrities and taxes the first thing that comes to mind is tax evasion not paying higher taxes. Just Google “celebrities and taxes” and see for yourself http://www.google.com/search?q=cele...s=org.mozilla:en-US:official&client=firefox-a .

So why is this oddball team proposing a "Robin Hood" financial-transaction tax at this time?

The financial-transaction tax has been debated in the UK, U.S., Europe, IMF, and G-20 and recent media reports indicate it's all but dead world-wide at this time. Government leaders around the world, including Secretary Geithner in the U.S. have acknowledged it’s an industry-destroying tax that would fall mostly on the middle-class.

Sweden tried a financial-transaction tax and its markets crashed over night, sending business to London. It quickly reversed its mistake and is now taking the lead in Europe to prevent governments from this same tragic mistake. A UK financial-transaction tax would send transactions to Switzerland and Asia. London City would loose hundreds of thousands of jobs; this will be the straw that breaks the UK’s financial back.

The celebrity/charity team recognized the financial-transaction tax would fall on the middle-class investor, and re-focused their attack on the villains of the moment: big banks. But their ideas don't seem to make sense. “The 'Robin Hood Tax' would not be levied on banks' transactions with high-street customers, but on those between financial institutions.” This approach sounds very unworkable in the real world. It’s almost impossible to separate the two.

The G20 is putting the finishing touches on its joint-consensus decision to implement an insurance-type levy on banks. It is very sensitive to carefully dealing with banks as they were expecting – what happened this week with - Meltdown 2.0 with PIGS (Portugal, Ireland, Greece and Spain) facing Lehman/AIG-type Meltdowns 1.0. Governments can't afford to allow celebrities and charities to mess up their national banks. Governments are in the midst of fragile bank recoveries, arranging bailout paybacks, and laying the ground work for a sustainable recovery. That is a very difficult job.

At the same time, we understand that charities are hurting as much as anyone else during this severe global recession. Their donations have dropped significantly. We call on celebrities to donate more of their money to charity in addition to free fund raising performances.

The celebrity/charity campaigners also understand governments don't want their tax base tapped by global charitable causes directly, so they revised their pitch as follows. They now propose giving half of the tax booty to governments and the other half directly to charitable causes.

Most American and UK taxpayers will cry foul over this attempt to usher in a new global tax regime. It’s a slippery slope when it comes to taxes. These groups are calling for a 0.05% tax now, but it will surely grow to a much higher rate later on. That’s how taxes work. Banks only are being targeted now, but this could grow to include all financial-transactions, as was the case a month ago.

Europe is now facing a great challenge in dealing with Meltdown 2.0 issues in Greece this week. Pundits say it will test the Euro. Governments need complete control and consensus over bank taxes. A global tax needs to be coordinated through the G-20, IMF, and other world bodies. That's not likely to happen any time soon.

Successful “fat cat” celebrities, athletes and entertainers should follow suit with donations of their own cash, rather than just offering to do free performances for charity. My beef is many celebrities keep their profits related to those free performances in after-event sales of their wares (like music downloads and big-ticket performances). Being a celebrity is all about promotion and they get more bang for the buck when they do it in association with charitable causes. I don't disparage the incredible efforts of some celebrities like Bono to make a huge difference in the world of charity; they should be highly commended.

The Robin Hood tax plan makes little sense, and it's odd and troublesome to taxpayers, governments, and officials working hard to find global consensus for solving important global problems. Most taxpayers in the world are happy to donate personal monies and services to Haiti relief and plenty of other laudable charities – even if they are strapped for cash themselves. What’s especially nice about charity is it’s not a tax; you can donate to whatever charities you choose.
 
This showed up on www.drudgereport.com

Global bank tax near, says Brown
Gordon Brown said on Wednesday the world’s leading economies were close to agreeing a global bank tax, amid hopes in Downing Street that a deal can be concluded at the G20 summit in Canada in June.

Mr Brown believes that opinion has shifted decisively in favour of a globally co-ordinated tax after President Barack Obama’s move last month to raise $90bn (£57.7bn) from a US bank levy.

The tax could cost the financial services sector tens of billions of pounds a year.

The prime minister has strongly advocated some kind of charge on banks. “I’m interested in the way support is building up for international action,” he said in an interview with the Financial Times.

Last year, Mr Brown mooted a tax on bank transactions – a so-called Tobin tax – as one of a number of options to make sure the “contribution banks make to society is properly captured”.

The US immediately shot down that option, but the International Monetary Fund has been looking at other ideas.

Mr Brown believes that the IMF will endorse a global bank levy before its April meeting in Washington.

Downing Street hopes an agreement in principle can then be agreed by world leaders at the G20 summit in June, although the implementation of the levy and the detail of how it would work could take longer.

“People are now prepared to consider the best mechanism by which a levy could be raised,” Mr Brown said.

He thought the IMF would propose a method that would be “somewhat different” from the tax on wholesale funding proposed by Mr Obama.

Other options would be for a tax on bank profits, turnover or remuneration. But the IMF is expected to shy away from branding the levy as “an insurance scheme” because doing so might encourage banks to think they would automatically be covered by the taxpayer if they ran into trouble again.
 
Seems Brown is trying to take credit for an idea which has already been floated by other countries such as the US and Sweden for the bank levy, not the tobin tax. But of course Brown wants credit to save his political career. This guy an ass!
 
Things are shaping up as we figured. One troubling quote on recent post is one of several bank tax/levy options is on turnover - does that mean revenue tax or trading proceeds tax? Doubt it if they say no FTT and levy instead. Obama bank fee is based on noninsured liabilities. US and German constitutions won't allow a selective income tax and the gov wants fee/tax/levy whether banks have profits or not. I think it will be balance sheet related and not profit or loss related - not on revenues or trading.

I said before they can't call it insurance because they don't want moral hazard coverage and they don't want the discipline of reserving the premium themselves. They will use this revenue to pay back prior bailouts - US TARP and similar in Europe. They are clearly reconciling and negotiating the final touches on the bank levy approach. It may be worked out and agreed to but then face gridlock in ratification in Congress and complex EU dynamics. Meltdownbailouts 2.0 on PIGS, US midterms, and UK PM election may put this all on hold.

Curious thing about Brown's flip-flop timing today on backing the levy over FTT. Did Brown promise the UK charities and celebrities - his ACORNs that he would keep talking FTT until they launched their campaign last night? If that's the case he must have considered their launch a dud to throw them under the bus after one day.
 
Quote from Robert A. Green: Brown's flip-flop timing today on backing the levy over FTT[/B]
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The two are being used interchangeably, and tax opposers, such as that Today programme interviewee (he shall remain unnamed because we have some mercy), should really try to distinguish a Tobin Tax (aka Robin Hood tax) from the Obama / Borg insurance levy on bank liabilities. Tax or levy, it is all the same for the Main Street... but only the Tobin tax would be paid by an average investor "like you an me" (see
http://en.wikipedia.org/wiki/Tobin_...investors_.27like_you_and_me.27_would_lose.22 )

In reality, the UK government has already instituted the Tobin tax on some (share-only) transactions... with realistic exemptions for derivatives (to save hedgers from destruction), for OTC share substitutes such as spread betting CFDs (to save the brokerage industry) as well as for... banks, i.e. market makers (to save pension funds from paying hefty bid/offer spreads). Because it has those essential exemptions, it raises only 3 bn per year (see e.g. Bond et al 2004, p.4, URL: http://www.ifs.org.uk/wps/wp0411.pdf ), not "tens of billions" as that actor claimed yesterday in the BBC interview.

The existing UK Tobin tax masquerades as a "duty" on "reserves" - Stamp Duty Reserve Tax (see: www(dot)hmrc.gov.uk/so/index.htm ), and is levied on everyone, including impoverished Third World investors from Sub-Saharan Africa and other non-resident aliens, in breach of the residence rule used as the attachment factor in international tax laws:

"A unique feature of SDRT, compared to other purely domestic taxes in the United Kingdom, is that more than 40% of the annual intake is collected from outside the UK, thus creating an annual inflow of approx. £1.5 billion pounds from foreign investors to the UK government." (see http://en.wikipedia.org/wiki/Stamp_duty_in_the_United_Kingdom#Stamp_duty_reserve_tax )

The "Unique" word has been used above, because international evidence on such taxes, e.g. the table 6.1. on page 279 in Campbel and Froot (1994) (see: http://www.nber.org/chapters/c6276.pdf ) shows that other countries played by the book and provided ex-country (or even off-exchange) exemptions.

Why has no-one in the British media asked a single question about the existing Robin Hood tax, i.e. Stamp Duty Reserve Tax? They certainly should, because it costs every one of them tens of thousands of pounds, despite all those exemptions... (see: http://www.lowtax.net/lowtax/html/offon/uk/uk_gotaway.html ) There would be no such exemptions in the proposed Robin Hood tax.
 
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