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

http://online.wsj.com/article/SB100...68011448519600.html?mod=WSJ_newsreel_business

This is good news for no FTT. Is the EU leaning towards a bank levy like the US rather than a FTT?

This EU Commission proposal is very similar to earlier U.S. proposals. The $50 billion prepaid bank levy fund was dropped from the US fin reg bill in the last minute because Republicans called it a bailout-enabling-moral-hazard fund. President Obama still is calling for a 90 billion bank fee (levy)._

The EU commission is sort of like the US CBO or joint tax committee, it analyzes and proposes tax policy. It doesn't legislate and there is a long and protracted country-by-country and pan-EU voting process before enactment.

During a meltdown and liquidity crisis in bank to bank lending, governments are less likely to punish banks with higher taxes. Lots will happen in the EU crisis before this bank levy is voted on. After the crisis, there will be retribution. What's happenening in the EU with their meltdown 2.0 is strikingly-similar to meltdown 1.0 in the US. They may go through the same trials and tribulations and it's easy to guess how the US will lean on them with advice.

But the Germans aren't buying this advice. Rather than spend their way out of trouble with more deficit spending debt, they will use austerity-savings. This will throw a monkey wrench into global cooperation on Keynsian bailout strategies and lead to imbalances which traders can exploit._

Sent from my iPhone
 
http://us.mobile.reuters.com/mobile...www.reuters.com/article/idUSTRE64Q2CW20100527

nice status report. FTT seems least likely of alternatives. Seems like there will be similar but different bank levies and taxes or none at all on a country by country basis. Most banks are global so they will pay or not pay different taxes in different countries. Not much reason to move banks for that.

An FTT is different. If passed in one country, transactions could easily move to platforms in other countries. For that reason, it seems unlikely. It's the most vulnerable to country tax shopping which would really hurt any country silly enough to pass it. That plus other problems discussed countless times make the FTT a loser idea.

Only chance of passage in the West is as a new euro tax, which I have also written about - ushered in by a resurgent German forging an EU fiscal union.
 
Quote from Robert A. Green:

Where's everyone else? Hope I am not posting too much and crowding out the thread.
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You're not. Glad you keep this thread alive.

The Europeans, especially the Germans, are shooting themselves in the knee. Leftist parties (they're now the majority) wanna block everything unless Merkel comes up with a FTT at least for the euro zone.

I just learned about a new word: on Reuters in an article about Peru they wrote about the "Social Risks" for entrepreneurs and investors.
I'm sure that politicians (in europe too) pay attention to what economists are saying, and act (make or not make laws) accordingly. However it's the working people in each of those nations who can render any government ruling useless.
Do think the people in Greece (2 of 10 are government employees) would sit down and say "oh yeah we see, now we got to forgo government handouts and see how we can make do!". I rather think there's gonna be more burning cars and buildings until they got something to their liking.
 
Quote from Robert A. Green:This EU Commission proposal is very similar to earlier U.S. proposals.
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It will be modelled either on the Swedish tax on bank liabilities or on the IMF's financial activity tax (the so-called FAT;):

"For now the tax would be limited to banks. It would not, for example, apply to investment funds or insurance institutions. Bank contributions could be based on their liabilities, assets or profits – the exact method remains to be determined. The amount, too, is still an open question, with IMF suggesting between 2% and 4% of GDP." [ source: 'Polluter pays' principle for banks', European Commission website article from 26/05/2010, URL: http://ec.europa.eu/news/economy/100526_en.htm ]
 
Quote from Robert A. Green:

No, carried interest only effects investment advisers not retail or prop traders with or without MTM. SE S-Corp loophole changes don't effect retail or prop traders either.

The new 2013 health care tax for the first time treats investment income - for upper income only- like earned income subject to SE tax - just the revised 3.8% Medicare portion. This is dangerous new precedent for investment income.

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Let's keep this topic on-topic, which is against the financial tax, not trying to lobby for advantageous tax breaks for one special interest group.

Ultimately there is no moral justification for taxing trading or investment gains less than ordinary income. Of course as traders (or professionals servicing traders) it's advantageous in the short-term to benefit from unfair tax breaks, but that doesn't make them any less unfair on ordinary income earners. Stuff like this is why some people on main street hate us and our profession.

Let's put it this way - lobbying for special tax breaks is short-term greedy and long-term stupid. Becoming a favoured class only works until people wake up to reality and then take revenge. We've already seen this with bankers and now they are going to get regulated into high-tax purgatory for the next 30 years - they would have done far better to lobby for a bit more regulation and taxation pre-crisis. It would be incredibly stupid for traders and fund managers to willingly bring the same fate upon themselves by following the same dumb, short-sighted, politically ignorant seppuku tactics that the banks followed.

So, no more pleading for 15% tax rates for multi-millionaire 7 figure+ earners please. It's completely unjustifiable and is quite likely to pave the way for eventual 70%+ depression-era top income tax rates. A far better approach is lobby for a flat tax on everything, for everyone. But that's another thread.
 
Quote from Ghost of Cutten:there is no moral justification for taxing trading or investment gains less than ordinary income
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1) The undesirability of double taxation? After all, capital gains have already been through the tax system at least once (when the wages income tax was collected at source) and will be also once more at the very end (if and when the 'death tax' is levied). In the special case when substantially all of the trader's equity comes from the trading itself (how likely is that?;), her entire capital has been over the years gradually taxed by the capital gains tax, which for her becomes more of a tax on capital, not merely on income or gains... and of course if she chooses to buy a handbag or milk for the kids, her expenditure is taxed once more by various consumption taxes (VAT or sales taxes).

2) The preference for productive activities over consumption? Don't investors (and traders, at least indirectly) support some sort of economic growth-inducing business activity underlying that fast moving ticker tape? How about the stock options granted by IT startups to their employees in reward of their 80% risk of failure? How about rewarding our trader's own risk of failure, which is at least as high as in main street businesses? Is that uncertain, volatile 'income' earned at a high emotional and opportunity cost by the few survivors really 'ordinary', deserving to be punished just like 7-figure fat-cat salaries (outside of the HFT/MM realm of course;)?
 
europe just wont give up on this trans tax

EU's Barroso: In favor of tax on bank profits; still believes in depending on ratings agencies
- Plan to propose rating agency reform package in Sept
- May be difficult to adopt a financial transaction around the world, yet G-20 should work on such a proposal
 
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