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

Starting not to even care any more - i have not spoken to one person in favour of this tax who showed any signs of financial literacy, it does not matter what length one goes to to explain there brains can not understand.

Being in the UK i am absolutely sick of the "eu" and so is every body i know how ever if something is packaged in the right way (wrapped in emotional bullshit) there all for it! Accepting an idea that will do them harm from an institution they hate because the words "morally right" and "socially just" are thrown in with it.

Get those bankers! But what about people like me? What! you buy shares in the morning and make £300.000 by lunch and are angry over a TINY TAX?...Yes I the one lot pip collector heard those words.

There is a good chance we don't stand a chance in hell, it will not surprise me if they attempt to make it illegal for "eu" citizens to use foreign brokers or otherwise slam this tax on them when they come to pay there taxes in the "eu" going through there trade logs and calculating what would have been paid if the citizen was not a deserter.

0.05% wipes me out yet even if my pockets ran deep enough to back it the spread and change in market activity will make it unworkable...what are the chances of a financial center else where in the world opening for business 24 hours a day making the "eu" and London irrelevant?

I know nothing of the regulations governing that.
 
Let's say EU will adopt an FTT and in 3-4 years they will convince USA and the other G20 countries to do the same. What do you think will CME and others do in this case? Can CME just move everything to some small country like Bahamas? Is it possible to trade mini ES in... Bahamas Merchantile Exchange?
 
a reminder for those who are uncomfortable with mathematics

you have up 100000

during the day you buy and sell 200000 worth of stock
250 x 200000 x .001= 50000

50000/100000 = .50 = 50%

that is a 50% tax on your capital.
SAC and no one here except tradador can overcome these barriers.
 
Quote from sheda:

There is a good chance we don't stand a chance in hell, it will not surprise me if they attempt to make it illegal for "eu" citizens to use foreign brokers or otherwise slam this tax on them when they come to pay there taxes in the "eu" going through there trade logs and calculating what would have been paid if the citizen was not a deserter.
More...

That's an interesting question. In the numerous national transaction tax attempts, I don't know of any country that tried to make trading tax free abroad illicit, but I haven't searched. Swedish people were trading english stocks, french people were trading the US or Germany( that's why I am here in fact )... It's super complex to tax transactions a posteriori and given that they know that the person will be exceptionally handicapped against the other particpants of the non taxed jurisdiction, it is really a no brainer for relocation( more than when you have to change exchange when you relocate ).

Plus countries are never hurt by some foreign currencies coming in. That's an activity they simply tax without all the drawbacks of support they have to provide to national based sector...If that makes sense...
 
In the US every state has a sales tax. Under the interstate commerce clause in the US constitution states are not allowed to put up barriers to interstate commerce. therefore states cannot collect taxes on out of state purchases. instead of sales tax they have created a use tax exactly = to their sales tax. in theory people are supposed to declare their out of state purchases and pay the use tax therefore new york sends agents to rhode island to look for people buying yachts there.

with the EU headed towards majority vote in many areas of life. instead of calling the FTT a tax u call it something else.

now tradator do u understand the parallel to a ftt?
 
Europe and the EU are so f*cked it's not funny. I doubt europe as well know it will be around in 10 years....seriously. They do everything to destroy money making industry and jobs. The debt crisis alone will spread everywhere like the spanish flu.

This shit ain't coming to the States anytime soon, nor will it. The EU will implement it and a la Sweden, they will destroy all their markets and scratch their heads as to why. Singapore will take all the trading away...watch!
 
Dear fellow ET FTT-opposition friends:

The bureau chief for Voice of America invited me to do a studio interview on FTT this Monday. "To discuss the FTT and FAT. I am interested in a response to the Nurses union and other unions who want to tax all Wall Street trades and use the money for job
development, infrastructure needs, educational needs,e tc. It is a
Wall Street payup to Main Street proposal. I read some of your
comments and would like to include a video interview with you in this story." "There are several elements to the story. The Nurses rally, a professor from NYU, and you. It will be packaged, once scripted and edited, into approximately a 4 minute story that you will be able to view on the Internet."

I asked if VoA can also publish a blog of my FTT position to support my interview too.

Here's a draft of my blog. I want your comments, corrections and suggestions before submitting to Molly my editor tomorrow. To give in a few pieces due to limitation of size. Again, it's not cleaned up yet in editing and wrote it quickly this afternoon.

See next posts.
 
Blog June 23, 2011

A new financial-transaction tax looks like juicy-low-hanging fruit, but it will make us sick.

By Robert A. Green.

When governments become heavy-handed with the economy and financial markets - either with onerous regulations, tax hikes or loose monetary policy – it’s more often than not led to distortions and problems, more than intended fixes.

One recent world-in-a-jam example is the U.S.-led housing finance crisis and meltdown since 2008. In her best-selling book Reckless Endangerment, Gretchen Morgenson - a leading business reporter for the New York Times – argues that the leading culprit of the housing crisis were the government service enterprises (GSEs) Fannie Mae, Freddie Mac and sister GSEs and government regulators including HUD. Politicians may have had a laudable goal to spread the American dream of home ownership to the lower middle-class, minorities and immigrants. Politicians and regulators lambasted banks for unforgiving lending standards and redlining policies against minorities. Government sought to solve this mortgage bottleneck with new rules requiring relaxed (disappearing) lending standards and guarantees on the credits by GSEs.

We all know how it turned out. Fannie Mae lied about its finances and policies, paid-off politicians who support the GSEs and raided the cookie jar for themselves. The cruel irony was that Fannie seriously hurt the very same lower middle-income people they promised to help. Fannie financially-engineered "no doc", "no income", automated and ARM mortgages and encouraged and enabled fraudster-mortgage brokers to sell predatory mortgages with exploding hidden interest rates designed to cause high interest payments for bond holders, foreclosures and bankruptcies by the duped home buyers. The American dream became the American nightmare.

Yes, banks played a conspiratorial role in the housing tragedy and they should be tarred and feathered over it too. Yet calls for Wall Street to pay for Main Street seem to deflect too much blame from Washington to Wall Street.

Selling the Fannie-Mae scheme and promoting housing for the poor, sounds very similar to the arguments being used to sell a new financial-transaction tax (FTT).

Rather than ACORN arguing for sub-prime mortgages, nurses and the AFL-CIO are pushing a FTT. Redlining was bad and so is austerity spending cuts that affect unions. But redlining was illegal and austerity measures are not. Public-sector unions are enjoying defined benefit plans, whereas the rest of lucky America who has a retirement plan has a defined contribution plan. Public-sector defined benefit plans can not generate the assumed 10 percent returns, so all the deficiency is charged to taxpayers with real estate and income tax hikes. Rather than attack retail investors with a FTT, unions should restructure and go on the same footing as the rest of America. They are fat cats when it comes to fringe benefits.

Other new proponents of a FTT are charities with their Robin Hood tax campaign, and global quasi-governmental and religious organizations like the UN, Catholic Church and various aide groups.

What’s undeniable is that these social-benefit organizations are in need of new means of funding, as they are suffering in the global recession partially attributable to the housing crisis as well. Is the Catholic Church in need of new funds? They have lost many devotes over sex scandals. No doubt, the intended uses for charity are for good causes. But caution, as we learned from the U.S. housing crisis, when politicians hold their hand out for the poor, the money often winds up in their own pocket, and their own overhead and salaries. Their policies instituted can have the opposite negative effect – like predatory loans exploding on unsuspecting home buyers who preferred to rent in the first place. Those home buyers lives are now destroyed.

Aren’t their countless cases, some investigated and some not, of corruption of this type of magnitude in many charitable activities too. Think of the UN program for Iraq food for oil, and other global social-cause campaigns? But let’s set that aside and assume that new taxes raised for global social causes will be well spent.

The best way to fund global social causes is with charity and there often are tax incentives to make charitable contributions too. In the U.S., billionaires like Bill Gates and Warren Buffett have launched a campaign asking other billionaires to join them in pledging half their fortunes to charity. Families with over a few hundred million dollars often have their own charitable foundations, and they direct money otherwise due to the U.S. and state tax authorities to the charities of their choice. Shouldn’t charity be voluntary and not a mandatory tax?

Several celebrities who are leading the Robin Hood FTT campaign have been implicated in tax cheating or other schemes, sometimes as simple as declaring their prime residence in an offshore tax haven. Bono upsets the Irish by living and paying taxes outside of Ireland and Ireland certainly could use his tax dollars now. Madonna cried foul about having to pay a low congestion-transportation tax in London. This list of celebrity tax avoidance is long. Why should celebrities who avoid taxes tell others with much less income to pay taxes?

......Part I above
 
Part II....

FTT would tax people twice, three, four and five times. Traders and investors already pay taxes on capital gains. It’s for this very reason, that a leading financial official of Japan said an FTT was unfair, wrong and he would not support it.

The biggest rallying cry or populist rant for justifying a FTT is for ‘Wall Street to pay back Main Street’ for all the destruction they caused in the last financial meltdown. As pointed out above, equal culprits for the housing finance meltdown were politicians, Fannie Mae, the regulators who allowed it all, the Fed for easy money and predatory and unscrupulous mortgage brokers on Main Street. So, yes ask Wall Street to pay back Main Street for some of this mess, but not for all of it. FTT is a shotgun blast that hurts Main Street, rather than a rifle-shot to target Wall Street.

Many argue let’s raise money from “where the money is” on Wall Street. After all, the same bankers who played a big role in the housing mess – like Goldman Sachs, JP Morgan and Deutsche Bank – are back on the gravy train paying themselves outrageous bonuses again. Peel the curtain back, on bank toxic assets (still housing and PIIGS debt), and see that banks are still in a precarious position. Many banks are teetering on the Greek crisis – the latest version of financial meltdown – and they may need to be bailed out again or allowed to fail – hopefully without contagion.

Even if you believe that Wall Street should pay the lion’s share here, it’s important to understand that Wall Street will deflect a FTT. The Dodd-Frank financial reform bill passed in July 2010 calls on banks to divest proprietary trading for their own account. The U.S. administration including President Obama and Secretary Geithner are very opposed to a FTT since it will hurt everyday Americans rather than be a cost for the banks. Secretary Geithner said an FTT would fall on the backs of retail investors, who already suffered losses in the financial markets. These include pensioners who have their pension funds invested in the markets too.

Now let’s get to the crux of the issue on why FTT may sound like free new money to social-spenders, but it’s actually a very dangerous idea that can further sink the economy and markets, cause a bigger and more extended recession, and lead to much less fund raising for charities too boot. Just as with the housing crisis, well-intended political heavy-handed policies will likely hurt rather than help the targets of their good will.

How exactly so? Remember the “flash crash” from May 2010? Per Wikipedia, “..On Monday May 6, 2010 in which the Dow Jones Industrial Average plunged about 900 points - or about nine percent - only to recover those losses within minutes. It was the second largest point swing, 1,010.14 points,[2] and the biggest one-day point decline, 998.5 points, on an intraday basis in Dow Jones Industrial Average history.” Fundamentally, while the world waited to hear the results of the EU and IMF’s negotiations to bailout Greece – the first time – that weekend the world’s stock market players grew extremely nervous over a Lehman-style contagious financial meltdown.

Regulators and Congress conducted a serious study of this event to find the causes and to change the rules to prevent this from happening again. The study showed that the flash crash was not a suspected ”fat finger” (erroneous) trade, but rather the result of high-frequency traders (HFT) disappearing from the markets. I am referring to the high-speed computerized trading programs that are the claimed evil-doers of the day, who some allege come into wreak havoc in the markets and cause undue speculation. FTT-enthusiasts including religious authorities argue they are doing “Gods work” to clean the house of evil speculators. Again, it’s the opposite of public perception and another example of half-cocked thinking and new regulations causing more harm than good.

Quick history lesson first. In the old days, traders stood around in trading pits on the exchange to trade in person with hand signals and grunts. Sounds quaint and honest, but often times it was anything but. Think of the film “Trading Places” with Eddie Murphy, playing outrageous fun, games and fraud in the pits. Trading moved to electronic exchanges, lowering costs and improving efficiency and fairness.

This makes sense, but who are the traders on these electronic exchanges? It’s the electronic “market makers” – the people to buy when we everyday people want to sell a stock or futures contract? Or to sell, when we want to buy? The reality is that the market-makers are significantly comprised of HFT traders.

Back to the lesson of the flash crash. That day, many important HFT companies decided to walk away from the market action, and presto we had a flash crash, since liquidity disappeared. The biggest contributing cause of any meltdown is loss of liquidity. That’s what quantitative easing is all about, the Fed proving new liquidity to banks. To fix the flash crash problem, we need to help HFT respect their role as market-maker and to be there for us when needed and not disappear. Why hit them with a new FTT that will surely put them out of business and dry up liquidity? Seems plain counterproductive or some could say stupid.

Now is not the time to pass a liquidity-killing tax in the financial markets. The same conditions that precipitated the flash crash – a Greek meltdown threatening contagion through PIIGS and throughout the EU and even the rest of the world – are happening again just one year later. There is little hope for an immediate fix to these problems, the can is being kicked down the road and it’s a problem to deal with for a decade. Regulators have other much-better-refined tools to address excess speculation, like increasing margin requirements and capital, and clearing derivatives on exchanges.

Think of FTT as a match that would light a forest fire. Yes, you would collect FTT as the tree burned down, but you wouldn’t collect it a second time after the forest mostly disappears. FTT is calculated on collecting it a 1,000 times, but again, you will collect it only once.

An FTT-induced market meltdown will lead to a severe recession and maybe depression in the developed world. That will kill off all sorts of taxes including income taxes, property and sales taxes and death taxes too. Charitable contributions will also dry up and charities will face much greater needs from the poor. Isn’t FTT just plain short-sided, half-cocked, mean-spirited, and misdirected thinking?

end of Part II
 
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