Bernie Sanders Transaction Tax?

T

tommo

Hi all,

Anyone have any idea how Sanders financial transaction tax works? It is proposed at 0.005% on derivatives trades.

So take bond futures. They have a $100,000 face value. So that would be $5 tax per trade. Assuming that is each side, a buy and a sell, thats $10 in tax per trade.

Pretty much kills off day trading and spread trading.

The optimist in me says "well it will clear out HFTs and everything become neater and dare I say easier to trade", however there will probably be people that get "market maker privileges" which means they carry on playing the HFT game and the rest of us priced out by the tax.

The tax has been tried before in various countries and never raised anything near the money they thought but who's going to worry about facts when you have blind ideology.
 
tommo said:
Hi all,

Anyone have any idea how Sanders financial transaction tax works? It is proposed at 0.005% on derivatives trades.

So take bond futures. They have a $100,000 face value. So that would be $5 tax per trade. Assuming that is each side, a buy and a sell, thats $10 in tax per trade.

Pretty much kills off day trading and spread trading.

The optimist in me says "well it will clear out HFTs and everything become neater and dare I say easier to trade", however there will probably be people that get "market maker privileges" which means they carry on playing the HFT game and the rest of us priced out by the tax.

The tax has been tried before in various countries and never raised anything near the money they thought but who's going to worry about facts when you have blind ideology.
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I think that you're right in that it's guaranteed to hurt retail and not HFT.

The problem with HFT is not that it exists, but that the volume disappears during volatile times. That's their prerogative of course, but as far as I'm concerned, that's the only problem.
 
tommo said:
The tax has been tried before in various countries and never raised anything near the money they thought but who's going to worry about facts when you have blind ideology.
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Because they assume no change in volume. Obviously trading volumes would plummet overnight. It's monumentally dumb. Like offering tax cuts and seeing GDP hovering at 2%.
 
Its such an idiotic idea. Financial services are one of the biggest cash cows to government revenue, this will just cause higher costs to the end user (you think mortgage companies are going to take the hit when hedging interest rate exposure or airlines hedging fuel exposure), lower tax revenue as trading gets taken to other exchanges and there's a list of examples of this tax failing as the loss in traditional tax revenue is greater than what is raised by the transaction tax.

Oh well, socialists are gunna socialist.
 
tommo said:
Its such an idiotic idea. Financial services are one of the biggest cash cows to government revenue, this will just cause higher costs to the end user (you think mortgage companies are going to take the hit when hedging interest rate exposure or airlines hedging fuel exposure), lower tax revenue as trading gets taken to other exchanges and there's a list of examples of this tax failing as the loss in traditional tax revenue is greater than what is raised by the transaction tax.

Oh well, socialists are gunna socialist.
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Let's tax each of his books $12 per copy. Stupid gink needs to retire.
 
tommo said:
Its such an idiotic idea. Financial services are one of the biggest cash cows to government revenue, ...
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Errrrr, "no!"

This is a subject of hot debate -- and specifically whether "excessive" trading is a net *drag* on "properly-utilized" savings dollars and by how much. Forcing those dollars {back} into the retail banking system, to raise reserves, lower interest rates, and encourage lending -- is seen (by some) as a much greater *good* than the *ill* of constraining what someone can do with their own wealth. (Whether that wealth is 1%-ers or simply 401k.)

No matter how you might feel about Bernie's socialist tendency to reach into others' pockets, the mechanics of a well-floated retail banking system are not really in the debate. It's the reaching into the pocket part that should bear scrutiny.
 
One learns to adapt, might get rid of HFT's and might not, either way trade larger timeframe and make less trades. This might end up being better. Stock options market might become the new day trading tool.

The Dems will stay up late thinking of new ways to tax, one day it will tax the air we breath.
 
tommcginnis said:
Errrrr, "no!"

This is a subject of hot debate -- and specifically whether "excessive" trading is a net *drag* on "properly-utilized" savings dollars and by how much. Forcing those dollars {back} into the retail banking system, to raise reserves, lower interest rates, and encourage lending -- is seen (by some) as a much greater *good* than the *ill* of constraining what someone can do with their own wealth. (Whether that wealth is 1%-ers or simply 401k.)

No matter how you might feel about Bernie's socialist tendency to reach into others' pockets, the mechanics of a well-floated retail banking system are not really in the debate. It's the reaching into the pocket part that should bear scrutiny.
More...

How does the tax force dollars back into retail banking and raise reserves?
 
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