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http://www.washingtonpost.com/blogs...obin-hood-tax/2011/11/08/gIQAUphK2M_blog.html
http://www.washingtonpost.com/blogs...obin-hood-tax/2011/11/08/gIQAUphK2M_blog.html
1/4% Tax on all stock trades pushed in NY Times today
- Thread starter seasideheights
- Start date
This article actually has some good info in it regarding why the administration opposes the ftt:
"But though the White House professes support for both goals, it believes that the financial transactions tax wonât work in practice and favors, instead, a fee on the biggest banks making the riskiest transactions."
The White House argues that thereâs significant evidence that the tax could actually make the markets more volatile by reducing the volume of trade but encouraging âbigger, more irregular financial transactions,â as one Financial Times columnist put it.
Secondly, the Obama administration believes that a financial transactions tax would be easy to game by driving money offshore and creating shadow markets to hide transactions from tax authorities. In the administrationâs view, a lot of ordinary investors would get hit, but sophisticated investors would avoid it â the primary objection thatâs also coming from independent community bankers.
Finally, the administration points to a recent analysis by the European Commission showing that the European Unionâs proposed tax would increase revenue but also have a âsmall but non-trivialâ impact on employment and GDP, resulting in a decrease of anywhere between 0.53 to 1.76 percent of GDP, as The Guardian reported.
loli've watched the entire 90 minutes of the EU-gathering and i agree. we're lucky to have him on our side at least
to summarize:
France: In favour
Sweden: Against
Belgium: In favour
Czech: Against
Germany: In favour
Luxembourg: Undecided. Worrying other big financial centres are against.
Slovenia: In favour, but too much uncertainty about how it should be spend
Malta: Against, not a good idea to do this Euro-wide and not world-wide
Cyprus: Against, naïve to think Euro can do this alone
Italy: Against. Are willing to discuss further, but some serious objections. Has to be global.
Finland: in favour
UK: Against. Has to be global, otherwise suicide
Denmark: I couldnât understand what she was saying exactly, but I guess in favour
Greece: In favour
Ireland: donât want it in Eurozone, if UK doesnât join. Wants further data.
Spain: in favour
Latvia: against
Bulgaria: against, must be worldwide
Netherlands: Undecided. Is investigating nationally.
Slovakia: I guess against but not sure, global is necessary
Romania: against, willing to discuss further but not enough data and many problems
other countries didn't speak
Everybody, especially UK (because they reckon it's not going anywhere anyway), wants a quick vote on this before more time is spend on this.
Thanks for this list. Good summary.
The Netherlands is a good example of the battle between popular support vs. economic governance.
Jan Kees de Jager, the Dutch finance minister, is staunchly against the FTT and has been outspoken in his opposition. He's said on numerous occasions that banks will avoid the tax and capital will flee Europe. But since 70% of the Dutch people support the FTT in the polls, de Jager has been ordered to cool his jets. The Dutch Prime Minister is concerned how this is going to play out in the next election. A few months ago, in Denmark, the anti-FTT party was voted out of office in favor of a pro-FTT party. The Dutch ruling party is now afraid the same thing could happen to them. So the Dutch Finance Minister is now talking in circles hoping that nobody notices.
The Netherlands is a good example of the battle between popular support vs. economic governance.
Jan Kees de Jager, the Dutch finance minister, is staunchly against the FTT and has been outspoken in his opposition. He's said on numerous occasions that banks will avoid the tax and capital will flee Europe. But since 70% of the Dutch people support the FTT in the polls, de Jager has been ordered to cool his jets. The Dutch Prime Minister is concerned how this is going to play out in the next election. A few months ago, in Denmark, the anti-FTT party was voted out of office in favor of a pro-FTT party. The Dutch ruling party is now afraid the same thing could happen to them. So the Dutch Finance Minister is now talking in circles hoping that nobody notices.
Thanks bjw.
The general public in all these countries needs to understand the actual implications of the FTT. They seem to think it will affect only the banks, perceived as taking bailout money then paying themselves lavish bonuses, and hedge funds a.k.a. big bad speculators.
What Goldman Sachs and Citibank have been up to only aggravates the situation.
This Gallup poll indicates that some 54% of Americans own stocks, and yet the general perception towards Wall Street is not positive, or even downright negative.
"Even as stocks have surged over the past couple of years, it has been hard for most Americans to understand what is happening on Wall Street and why, leaving them hesitant to invest in the stock market."
http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx
The general public in all these countries needs to understand the actual implications of the FTT. They seem to think it will affect only the banks, perceived as taking bailout money then paying themselves lavish bonuses, and hedge funds a.k.a. big bad speculators.
What Goldman Sachs and Citibank have been up to only aggravates the situation.
This Gallup poll indicates that some 54% of Americans own stocks, and yet the general perception towards Wall Street is not positive, or even downright negative.
"Even as stocks have surged over the past couple of years, it has been hard for most Americans to understand what is happening on Wall Street and why, leaving them hesitant to invest in the stock market."
http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx
Taxing Stock Trades Will Hurt Main Street
http://online.wsj.com/article/SB10001424052970204224604577029793292855040.html?mod=googlenews_wsj
http://online.wsj.com/article/SB10001424052970204224604577029793292855040.html?mod=googlenews_wsj
>>With apologies to Mr. Amihud and Mr. Mendelson and the Wall Street Journal for copying and pasting, here is the article for those who do not subscribe to the Journal.
By YAKOV AMIHUD AND HAIM MENDELSON
Every few years, the idea of imposing a "sin tax" on Wall Street makes a comeback, and the idea is back again in the wake of the financial crisis. Proponents of a securities transactions tax look upon it as a way to punish sinners (securities traders), discourage their sinning (trading), and raise revenue for the U.S. Treasury.
Bills that have been introduced by Sen. Tom Harkin (D., Iowa) and Rep. Peter DeFazio (D., Ore.) would place a tax of up to 0.25% on the value of stock tradesâthat's 25 cents on every $100âas well as taxing transactions in other financial instruments. On this page last week, consumer advocate Ralph Nader noted favorably that other progressives want an even higher tax.
Our research shows unambiguously that higher trading costs depress the prices of stocks and bonds. A transactions tax will end up punishing Main Street, hurting the economy and reducing U.S. Treasury revenues in the next few years. It will thus exacerbate the effects of the financial crisis.
We estimate that a 0.25% transaction tax on stocks will lower their average price by about 10%. The effect will vary across stocks, being more depressive for large-cap stocks, like those in the Dow Jones Industrial Average. These highly-liquid stocks trade very frequently with a bid-ask spread of a penny. According to a report by Investment Technology Group, the total transaction cost on U.S. large-cap stocks averages 0.32%, so a 0.25% transaction tax will increase the transaction cost by about 80%. For the average U.S. stock, with a total transaction cost averaging of 0.46%, the increase is almost 50%. Most bond trades have significantly lower transaction costs, so if they too are taxed, the increase in costs will have a larger negative effect on prices.
The drop in stock prices means that companies will have to earn more on stock-financed investments to make them worthwhile. Similarly, a transaction tax on corporate bonds will make their price fall for any given coupon rate that they offer, meaning that the borrowing cost for companies will rise. All of this means a rise in the "hurdle" rate that investments must earn to make them profitable. As a result, companies will forgo investment projects that could have been financed if they could fund them at lower cost.
In essence, a transactions tax on securities is tantamount to a rise in interest rates, which inhibits investment and economic growth. This is the last thing we need.
Will the tax help reduce the government deficit? Not in the first few years. The immediate decline in securities prices as a result of the securities transactions tax will reduce tax collection on capital gains. By our estimates, it will take a few years before the tax could have a positive effect on tax revenues.
A tax on transactions will naturally discourage trading and lead to a reduction in the volume of trades in U.S. markets. But today's electronic trading networks transcend national boundaries. Trades are routed to the computer that offers them the highest liquidity and the lowest transaction costs. Trading will migrate to trading centers that are not subject to the tax, and companies may choose to list on foreign exchanges. Over time, the loss of trading will threaten the U.S. leadership in financial services and reduce employment in the broker-dealer and affiliated industries. This in turn will reduce consumption and exacerbate the economic slowdown.
The hope that a securities transaction tax will reduce stock market volatility is wishful thinking unsupported by evidence. Anna Pomeranets of the Bank of Canada and Daniel Weaver of Rutgers University recently studied the effect of nine changes in the New York State Stock Transfer Tax between 1932 and 1981, when the tax was abolished. Their paper shows no consistent relation between tax changes and changes in stock volatility. Other studies of changes in transaction taxes and minimum commissions elsewhere in the world found that market volatility either increased or remained unchanged when these trading costs increased, while trading volume consistently declined.
A tax on Wall Street will hurt Main Street by reducing employment and investment, and it will increase the budget deficit at least in the short run. The waning investors' wealth as a result of the decline in asset prices will reduce consumption and hinder economic recovery, a far cry from what tax advocates hope to achieve.
Mr. Amihud is a professor at the NYU Stern School of Business. Mr. Mendelson is a professor at Stanford Business School.
I saw a short piece on local television last night about how OWS and affiliates across the country are organizing email write-in campaigns to Senators and Congressional Representatives in support of the Defazio-Harkin Financial Transaction Tax legislation.
Have you contacted your Senators and Representatives expressing your opposition to the Defazio-Harkin legislation? If not, what are you waiting for? Get everyone you know (spouse, children, friends, neighbors, family, etc.) to contact their Senators and Congressional Representatives. It's very easy and only takes a few minutes. Just go to their website (every elected official has one) and send them an email.
Don't just sit there. Do it!
Have you contacted your Senators and Representatives expressing your opposition to the Defazio-Harkin legislation? If not, what are you waiting for? Get everyone you know (spouse, children, friends, neighbors, family, etc.) to contact their Senators and Congressional Representatives. It's very easy and only takes a few minutes. Just go to their website (every elected official has one) and send them an email.
Don't just sit there. Do it!