Tax on Trades Should Be Part of Rescue Plan, Some Democrats Say

[swtrader]

Quote from Susannah:

Perhaps we should start coming up with the reasons that Mr. Joe Citizen or Random Small Business would suffer because of this bill (actually make a list we can base a letter off of) and we could send those to our lawmakers? Face it guys, they don't care about a small number of daytraders, but the implications of that go beyond that. If we could all articulate that, I think it would go further than yelling at them.

A lot of reasons have been given already. If I have some time after market closes, I'll try to start the list if no one else has.

1) It's a draconian penalty, nearly 60 fold increase of transaction fee, on a group of people who
a) didnt cause this
b) dont benefit from the bailout
c) in many cases, are AGAINST the bailoutm and feel just as wronged by the bailout as everyone else

2) It will dry up liquitity - many if not most traders feel they cannot make a profit with a 60 fold increase in transaction fee - I know I cant

3) Item 2 means it will drop tax revenues right away - this isnt the usual 'lower taxes mean higher revenues' line, common sense tells you that such a severe increase in taxes can stop nearly any activity

4) Farm commodies prices will swing more violently, and perhaps have a larger subsidy liability - the whole point of these exchanges was to make buying and selling more smooth and liquid - thats the only point of an exchange

5) American firms like MERC/CME etc will be out of business and become YET ANOTHER industry driven offshore

CME/MERC has to make this case - they have people in Washinton

It really is up to them, they need to provide a communication to Washington and any talking points that individuals need to make the case to their reps

 

[Trader922]

Unfortunately most people wouldnt know a good fill from a bad one, so they dont think this tax would impact them at all............

Does anyone have a list of the 16 people that are in support of this thing? If so, please post it so we can get in touch with them.

I responded to my weekly T. Boone Pickens email requesting him to call the elected officials about this too. We'll see if I get a response.

He is having a Live chat on PickensPlan.com after the Presidential debate tonight so I will mention it on there as well. I suppose he is as good of a person as anyone to tell them that this tax is a terrible idea.

Eric

 

[smilingsynic]

Quote from Landis82:

Your attitude is why this stuff is allowed to even get the slightest bit of attention, let alone gain momentum and traction. Just reading the kind of "language" in that absurd proposal should make every single AMERICAN cringe in their bones.

You need a reality check, my friend.

I sent letters and e-mails, and called into a local talk show this morning where I highlighted De Fazio's proposal.

Now go crawl back into your little make-believe "bubble".
Thank you.

Did you actually read what I was reacting to?

I doubt it--hence, your post.

Here was my point: Yelling like an idiot at some poor putz who happened to answer the phone at your congressman's office is not going to solve anything.

Writing letters and acting on the phone like a mature and rational citizen will do wonders.

 

[Cutten]

Quote from Jayford:

Just think how screwed I'd be. I've been a full time, self employed trader for 21 years now. Who the hell would hire someone who has been self employed for almost his entire career? I have several degrees, but they were a long time ago. I could retire, but I'd have to go to a third World country to do it with the funds I have stashed away.

I would be soooo fucked.

You could move to China - not only would it be cheaper, with fewer fat women, but you would be allowed to sell short too!

 

[Cutten]

Quote from FerdinandAlx:

1. Register an IBC on the British Virgin Islands.
2. Move out of the country
3. Pay yourself a 70k annual tax exempt salary.
4. Set up some accounts through your corporation for personal living expenses.
5. Use your corporation to compound capital free from capital gains taxes.

He isn't going to have any profits to pay himself with if his transactions cost are 0.25% per trade.

 

[huh]

From an article on cnbc:

In a letter to House Speaker Nancy Pelosi, Boehner urged that the House Republican proposals be "given the consideration they deserve."

The proposals include:

Wall Street – Not Taxpayers – Should Fund the Recovery
Private Capital – Not Tax Dollars – Should Be Injected Into Financial Markets
Immediate Transparency, Oversight, and Market Reform

....now the part about the repubs wanting "Wall Street" to pay for this mess kind of makes me nervous that some of these clowns might actually consider this ridiculous tax.....

http://www.cnbc.com/id/26895236

 

[Cutten]

Quote from Toonces:

If they have already done this in Gr Britain, why wouldn't they do it here? What effect did it have on London's stock market?

Much less liquidity for mid & small caps - wider spreads. There is a market-maker exemption so basically for small stocks you either pay a wide spread and get ass-raped by the market-making firm, or you sit on the bid for days hoping for a fill (if you don't get front-run by the MM upping his bid).

Because of this a grey-market tax-exempt sprung up - CFDs. They don't have the tax, but the commissions are extortionate (e.g. 0.1-0.25% of face value) and they only apply to bigger stocks.

Basically the tax really fucks over market liquidity in the smaller issues.

 

[GermanTrader]

Quote from huh:

now the part about the repubs wanting "Wall Street" to pay for this mess kind of makes me nervous that some of these clowns might actually consider this ridiculous tax...

I guess I am still missing it. Why would traders be penalized for what the mortgage banks who loaned the money to poor payors are solely responsible for? Deep pockets? Or is this just another money grab to tax what isn't already taxed at every stage? Mother fucking politicians...

 

[Pasternak]

Quote from Cutten:

Much less liquidity for mid & small caps - wider spreads. There is a market-maker exemption so basically for small stocks you either pay a wide spread and get ass-raped by the market-making firm, or you sit on the bid for days hoping for a fill (if you don't get front-run by the MM upping his bid).

Because of this a grey-market tax-exempt sprung up - CFDs. They don't have the tax, but the commissions are extortionate (e.g. 0.1-0.25% of face value) and they only apply to bigger stocks.

Basically the tax really fucks over market liquidity in the smaller issues.

I thought they planned getting rid of the stamp duty?

 

[swtrader]

Quote from Cutten:

Much less liquidity for mid & small caps - wider spreads. There is a market-maker exemption so basically for small stocks you either pay a wide spread and get ass-raped by the market-making firm, or you sit on the bid for days hoping for a fill (if you don't get front-run by the MM upping his bid).

Because of this a grey-market tax-exempt sprung up - CFDs. They don't have the tax, but the commissions are extortionate (e.g. 0.1-0.25% of face value) and they only apply to bigger stocks.

Basically the tax really fucks over market liquidity in the smaller issues.

the WHOLE POINT of this bailout, supposedly, is LIQUIDITY

supposedly, it's not the actual value of the mortgages, but the LIQUIDITY that requires the bailout (which is of course, bullshit, they're trying to stuff bad debt on the taxpayer)

the net result of this proposal, is a subsidy for junk loans, and the dryup of liquidity spreading to everything

a politisized market, where the only thing that matters is the political power of the entity/player - market skill be damned