Proposed Financial transaction tax question (Futures)

[wartrace]

My question is regarding the proposed tax on derivatives and specifically the futures markets. I have seen people proposing a .02% to .005% tax on derivatives (Futures) and am curious what value will be taxed.

Will it be the full value of the underlying futures contract? As an example the 6E (Euro FX)contract is 125,000 euro's

0.02% X 125000 = 25.00 x 2 = 50 dollars round trip per contract.
0.005% X 125000 = 6.25 x 2 = 12.5 dollars round trip per contract.

Now the EruoFX contract tick size is 6.25. If the .02% figure is used there would be a 8 tick "tax" on every trade winner or loser. If the .005% tax is used there would be a Two tick tax. Even the worst commision plus exchange fees is under five dollars round trip.

OR will they be taxing the margin requirement? In the case of the 6E it is 500 dollars per contract.

0.002% x 500 = .10 x 2 = .20 cents R/T
.00005 x 500 = .025 x 2 = .05 cents R/T

Does anyone know the "plan"?

 

[DaveV]

There is no plan. It is just political campaign talk, mostly by Bernie Sanders.
To pass such a tax, the Democrats would have to maintain their House majority (likely), take back the Senate (unlikely), and win the Presidency (possible, but it is very hard to defeat a sitting President unless the economy is really bad).

Right now, I would not worry too much about a financial transaction tax, Medicare For All, or any other grand legislative changes.

 

[gkishot]

My question is regarding the proposed tax on derivatives and specifically the futures markets. I have seen people proposing a .02% to .005% tax on derivatives (Futures) and am curious what value will be taxed.

Will it be the full value of the underlying futures contract? As an example the 6E (Euro FX)contract is 125,000 euro's

0.02% X 125000 = 25.00 x 2 = 50 dollars round trip per contract.
0.005% X 125000 = 6.25 x 2 = 12.5 dollars round trip per contract.

Now the EruoFX contract tick size is 6.25. If the .02% figure is used there would be a 8 tick "tax" on every trade winner or loser. If the .005% tax is used there would be a Two tick tax. Even the worst commision plus exchange fees is under five dollars round trip.

OR will they be taxing the margin requirement? In the case of the 6E it is 500 dollars per contract.

0.002% x 500 = .10 x 2 = .20 cents R/T
.00005 x 500 = .025 x 2 = .05 cents R/T

Does anyone know the "plan"?

Always the full value of the contract. Imagine trying to make money with spreads.

 

[KeLo]

There is no plan. It is just political campaign talk, mostly by Bernie Sanders.
To pass such a tax, the Democrats would have to maintain their House majority (likely), take back the Senate (unlikely), and win the Presidency (possible, but it is very hard to defeat a sitting President unless the economy is really bad).

Right now, I would not worry too much about a financial transaction tax, Medicare For All, or any other grand legislative changes.

The trader tax was also included in the official 2016 Democratic Party election platform with Hillary Clinton. I call that a "plan," minus specific details. (see link below)

“We support a financial transactions tax on Wall Street to curb excessive speculation and high-frequency trading, which has threatened financial markets. We acknowledge that there is room within our party for a diversity of views on a broader financial transactions tax.”

https://democrats.org/wp-content/uploads/2018/10/2016_DNC_Platform.pdf
(see page 9)
https://taxfoundation.org/tax-proposals-2016-democratic-platform-explained-part-1/

I predict that it will be implemented to some degree whenever the Dems capture the Executive and both legislative branches of the Federal gov't again. That is how WE are going to pay for "free college."

"Free college is the future of the Democratic Party."
https://newrepublic.com/minutes/141951/free-college-future-democratic-party

 

[ETJ]

Dem's need to run the table in 2020 to get any of this done. They have the house and based on today's data they will keep it. They then need the two other pieces and we'll see - not impossible. Most states public education is already pretty much free to the needy doesn't mean there are still costs and here in Illinois, we are in the midst of a higher education controversy.
Where folks with the wealth - they were essentially shifting custody of their college-bound students and the lions share of it was up here in the affluent North Shore.

https://www.huffpost.com/entry/illinois-college-scholarships_n_5d3f9dbee4b01d8c97806393

 

[DaveV]

I predict that it will be implemented to some degree whenever the Dems capture the Executive and both legislative branches of the Federal gov't again. That is how WE are going to pay for "free college."

Free college is the most likely to pass, and they won't need a financial transaction tax to pay for it. I was surprised at how little, $79 billion, it would take to pay for free, PUBLIC college tuition for every U.S. student, and that half of that would be covered by money the Federal government is already giving in grants directly to colleges or via financial aid.

Tuition-Free College Could Cost Less Than You Think
https://www.nytimes.com/2019/07/19/business/tuition-free-college.html

 

[nooby_mcnoob]

Free college is the most likely to pass, and they won't need a financial transaction tax to pay for it. I was surprised at how little, $79 billion, it would take to pay for free, PUBLIC college tuition for every U.S. student, and that half of that would be covered by money the Federal government is already giving in grants directly to colleges or via financial aid.

Tuition-Free College Could Cost Less Than You Think
https://www.nytimes.com/2019/07/19/business/tuition-free-college.html

The problem with tuition isn't that it isn't free. It's that the administrative overhead has inflated by some huge factor from the heyday of post-secondary education tuition.

And what these numbnuts are proposing is to follow the same model for any other industry in which you want busybodies:

1. Find a private system that works
2. Inject government loans into payments into that private system
3. Increase prices since customers pay more through loans
4. Bankrupt customers
5. Government bailout

crazypills.gif

 

[Scataphagos]

Free college is the most likely to pass, and they won't need a financial transaction tax to pay for it.

Even "free", college is mostly a joke.

There's little value to an employer for your knowledge of "gender studies" or "women's rights".... degree or not.

Employers want people who can analyze problems and solve them. Math, physics, computer science... or specialties like medicine.

Regardless of one's passion, a primary objective of a college degree is to teach you how to analyze and think critically.

Completing degree "requirements" in a BS topic is a waste of time and money... as so many have learned in hindsight.