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

After reading the article above....

How the hell do they expect to earn tax revenue on trades that will not take place anymore?

-HFT makes up most of the volume.
-The tiny fraction of a percent tax would eliminate HFT.
-Where is the money going to come from at that point?

I think the FTT supporters really have no clue what goes on.
They just hear "tax the filthy rich traders" and swoon, as if the public perceives us as having consistent, easy, and guaranteed riches.
They obviously never read through this forum.
 
The report, titled “Taxing the Wall Street Casino,” contends that a transaction tax could raise $177 billion a year and could have even prevented last month’s so-called flash crash, in which stocks took a huge dive in just minutes and then suddenly shot back up.

How would this tax raise $177 billion per year when liquidity would drop 70% (or more). Not to mention all the lost jobs it would cause and loss of income tax from those jobs, etc.

“They are talking about just going ahead with an E.U.-wide transactions tax,” Ms. Anderson said. “Then what would happen if we start to see them enjoy major benefits from this while the U.S. is out in the cold? I think it could become a real issue for U.S. economic competitiveness.”

Yeah right. I can't wait to see all those major benefits the EU will reap if they go ahead with a FTT. I guess if lack of liquidity and a major increase in volatility are benefits (LOL). I honestly don't think the G20 is going to give this much time at the upcoming meeting in Toronto. This FTT is a pipe dream and the G20 (as a whole) knows that and they will focus on more important things (IMHO).

-Guru
 
Quote from stefan_777:

If anything, a Europe wide FTT would be a free giveaway to the U.S and Canada.
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I would be shocked if they could even get the EU to get onboard the FTT train:)

-Guru
 
He has not spoken kindly of the financial transaction tax.
'It didn't work, because the idea with this tax is that everyone should have the same level, but what very often happens is that many countries will say, 'No, we will not have such a tax,' ... So in Sweden, capital left Stockholm and went somewhere else,' he said.
'We don't think that that is the solution to the problems we have,' he said.
On the other hand, 'We have not seen a flight of capital out of Sweden' after introducing the bank levy, which imposes a fee on Swedish banks based on the exposure to risk on their balance sheets, he said.

http://www.monstersandcritics.com/n...infeldt-brings-experience-to-bank-levy-debate
 
Quote from listedguru:How would this tax raise $177 billion per year when liquidity would drop 70% (or more)
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Good question. The $177 bn figure is in fact the good old Dean Baker's $150 bn estimate posted in December 2009 on his firm's website (CEPR.com if I recall correctly, you know, the 30% union-financed one;). The multi-billion Baker's revenue 'estimate' is referenced in footnote 28 of the 'new' PDF document, called 'Taxing the Wall Street Casino', posted on the Institute for Policy 'Studies' website (URL: www(dot)ips-dc.org/reports/taxing_the_wall_street_casino ). Surprisingly though, the main author, Mr. Baker himself is left out from the long list of co-authors (4 pages per person - see how they reduced unemployment already!), even though he is the sole person responsible for their main 'finding', i.e. the revenue guesstimate.

Apart from riding on the most recent public fears (with the oil industry replacing slowly bankers) and apart from the same old revenue overestimate (which includes even such blatant errors as taxing both sides of every stock transaction and taxing exempt instruments such as government bonds), most of their old 'arguments' are repeated here as well. For instance on page 14, the IPS mistook turnover for taxable profits, disregarding typical industry markups. It is just intellectually dishonest to compare the typical 5% main street sales tax (levied on businesses with 50-100% markups) with a 'tiny' 0.0025 tax imposed on Wall Street market-making firms which earn (as in: 'revenues', not even 'profits') up to... 5 cents per $100 share, i.e. 0.0005 (see some firm quotes please). With truly high-frequency trading firms such as Tradeworx earning even less, having net profit margins of just 0.1 cents per share... that's 0.000017 profit margin for a typical share priced at $60... go on and tax them at 0.002500, but perhaps consider also imposing a 14700% corporate income tax on the currently most unpopular main street industry;) A propos of the 'flash crash' argument raised by the IFS, Tradeworx has recently published their testimony given for the SEC in defense of the HFT community (called 'Tradeworx commentary for SEC on Market Microstructure' URL: www.tradeworx.com/TWX-SEC-2010.pdf) - these notes written from the front lines should arguably contain more insights into the 'casino' industry, than the helicopter views of the IFS and CEPR union members.

As for the miraculously reincarnated 'Dean' Baker - we need to revisit the past to avoid repeating the same old mistakes...

"The total amount of missing tax revenues can be therefore as large as $96.6bn"
[ http://www.elitetrader.com/vb/showthread.php?s=&postid=2716631&highlight=Baker#post2716631 ]

'yes they used the transaction costs estimates from 1990 in a 2003 paper, and included in it: a) commissions, b) bid ask spreads, and c) market impact / slippage / missed opportunity costs / chasing the stock. And remember that they applied this cost to market makers...'
[ http://www.elitetrader.com/vb/showthread.php?s=&postid=2719067&highlight=Baker#post2719067 ]

'So what Mr. Baker has just admitted here?
1) FTT taxes have not been designed to raise revenue, but for behavior modification purposes: "An FTT will raise transactions costs and therefore reduce the volume of trading. This is one of the main purposes of the tax."'
[ http://www.elitetrader.com/vb/showthread.php?s=&postid=2716524&highlight=Baker#post2716524 ]

'using Mr. Baker's 1.25 adjustment factor, in "current money" the missing revenue would amount to $94.6 billion).'
[ http://www.elitetrader.com/vb/showthread.php?s=&postid=2705829&highlight=Baker#post2705829 ]
 
Quote from ZeroSigma:

that's 0.000017 profit margin for a typical share priced at $60... go on and tax them at 0.002500, but perhaps consider also imposing a 14700% corporate income tax on the currently most unpopular main street industry;)
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Really interesting statistic, thanks ZeroSigma. In my posts, I always refer to profit margins under 0.01% but I didn't have a real stat.
 
Here's a little more insight into the discussions at the EU summit yesterday from Der Spiegel. The call for the G20 to investigate an FTT is pure window dressing that attempts to disguise the divisions that exist within the EU:-

http://www.spiegel.de/international/europe/0,1518,701471,00.html

[...]
(Merkel) had wanted to travel to Toronto next week with unanimous EU support for a bank levy and a global financial transaction tax. The levy plan envisions paying into a fund that would be tapped to cover the cost of future financial crises. The transaction tax, meanwhile, is intended to curb speculation on the financial markets.

But the German-French initiative came up against considerable resistance from other EU members. British Prime Minister David Cameron, who made his debut at a summit, blocked it together with his colleagues from the Czech Republic and Sweden. The discussion "wasn't so easy," Merkel said. In the end, they agreed to a push for "systems of levies and taxes" in Toronto that would see banks cover some of the costs in future crises. The details, however, remained nebulous.

The discussion over a financial transaction tax proved even tougher. Cameron avoided a direct confrontation with Merkel. He ultimately agreed to a vague formulation in the closing document which stated that the EU leaders are united in their desire to "research and develop" a global financial transaction tax. With that, Merkel is now able to state that there is a common EU position heading into the G-20 summit in Toronto. But she didn't convince Cameron.

Indeed, all it took was a single question from a journalist to show that the alleged compromise was pure window dressing. The journalist asked Merkel who, exactly, would "research" this tax. Her answer: "Of course the G-20, or the IMF, I don't know."

Most expect that the tax will be rejected at the G-20 summit, right along with the bank levy. A whole slew of countries -- including Canada, Japan, Australia, Brazil and China have already expressed their aversion to the proposal. Merkel has said that if they reject it, the EU will have to "assemble again" to consider going it alone without international support -- and likely without Britain and, perhaps, others as well.
[...]
 
Quote from Explorer:

Here's a little more insight into the discussions at the EU summit yesterday from Der Spiegel. The call for the G20 to investigate an FTT is pure window dressing that attempts to disguise the divisions that exist within the EU:-

http://www.spiegel.de/international/europe/0,1518,701471,00.html

[...]
(Merkel) had wanted to travel to Toronto next week with unanimous EU support for a bank levy and a global financial transaction tax. The levy plan envisions paying into a fund that would be tapped to cover the cost of future financial crises. The transaction tax, meanwhile, is intended to curb speculation on the financial markets.

But the German-French initiative came up against considerable resistance from other EU members. British Prime Minister David Cameron, who made his debut at a summit, blocked it together with his colleagues from the Czech Republic and Sweden. The discussion "wasn't so easy," Merkel said. In the end, they agreed to a push for "systems of levies and taxes" in Toronto that would see banks cover some of the costs in future crises. The details, however, remained nebulous.

The discussion over a financial transaction tax proved even tougher. Cameron avoided a direct confrontation with Merkel. He ultimately agreed to a vague formulation in the closing document which stated that the EU leaders are united in their desire to "research and develop" a global financial transaction tax. With that, Merkel is now able to state that there is a common EU position heading into the G-20 summit in Toronto. But she didn't convince Cameron.

Indeed, all it took was a single question from a journalist to show that the alleged compromise was pure window dressing. The journalist asked Merkel who, exactly, would "research" this tax. Her answer: "Of course the G-20, or the IMF, I don't know."

Most expect that the tax will be rejected at the G-20 summit, right along with the bank levy. A whole slew of countries -- including Canada, Japan, Australia, Brazil and China have already expressed their aversion to the proposal. Merkel has said that if they reject it, the EU will have to "assemble again" to consider going it alone without international support -- and likely without Britain and, perhaps, others as well.
[...]
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EU will not pass a TT whilst Cameron is in power in the UK.

Merkel becomes more of a laughing stock each day. I can't wait until the PIGS default...er, I mean 'restructure'... so I can make even more money off the incompetence of tyrannical idiots like her.
 
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