Trickle Up Solution to our Financial Woes.

[Max E.]

What would you make off high volume scalpers? I have been involved with strategies which entail moving 3 millionm shares a day.

3 mill shares per day *30.00 per share * 0.01 = roughly 900k per day based on your tax. I can promise you with unbridled certainty, that There is no way in hell anyone who trades for a living can afford 900k per day in taxes....


Plus you have the bond market. Do you think people can afford a 2% tax on the bonds they buy, given the fact that bonds are currently paying roughly 3%?


I hate to say it, but this is a bad idea at the present time.

Quote from PocketChange:
You do get $12k a year regardless of income to keep things fair. That would cover the round trip transaction fees on $600K of equities.

I do see your point but unless you can work around the transfer of securities maybe using options my marxist plan would ding you 1% when you fund your account, 1% when you buy and 1% when you sell any security where ownership is conveyed and 1% again when you take your cash out.

4% per trade would be a brutal hit. My original intent was for the transaction tax to only be assessed when transferring money in and out of your account. The actual trading activity in your broker account would not be subject to transactional fees. Your broker on the other hand will get hit with transaction fees on their settlements which would be passed down to you in their fees.

The key for this style of a taxing plan to work is to constantly have money trading hands. The transactional volume will be at least 10x our GDP.

 

[PocketChange]

It would have to be 1% only when you transfer funds in and out of your account. That is the easy part... Broker fees, exchange fees and clearing fees would pay 1% on their fees collected.

I suppose many of the SEC rules are moot since their are no corporate or personal taxes.

Same with bank accounts, gift cards. Depositing money the bank pays 1% on funds received (reducing your deposit value).

In its simplest form: 1% is paid by the recipient of money. Model is similar to credit cards with the govt taking its 1% cut when it clears and approves the transaction.

This system gets gamed when $'s are converted to some other type of stored value system or currency for conducting transactions.

Quote from Max E. Pad:

What would you make off high volume scalpers? I have been involved with strategies which entail moving 3 millionm shares a day.

3 mill shares per day *30.00 per share * 0.01 = roughly 900k per day based on your tax. There is no way in hell anyone who trades can afford this.

Plus you have the bond market. Do you think people can afford a 2% tax on the bonds they buy, given the fact that bonds are currently paying roughly 3%?


I hate to say it, but this is a bad idea at the present time.

 

[denner]

Quote from peilthetraveler:

1% tax will get rid of all the daytraders and they will all have to go get real jobs then. Of course when you remove that much liquidity, you increase volatility...the day traders left over will see huge swings in price, but on the down side, see really huge spreads.

Great idea, but wait, there are no real jobs left. Sorry, when TPTB decided to gut this economy into an asset inflationary scheme (where the tail wags the dog of the real economy), we got THIS.

 

[Max E.]

The idea of a "financial transacstion tax" has already failed... look at the LSE tax.


Last i checked Londons taxes continue to be higher than ours, in accordance with the taxes on every transaction that pertain to the LSE.

They have played this game. And it failed.

 

[tomdavis]

Let's use round numbers to work through an example: The value of one ES mini contract is (ballpark) $100,000. Therefore, there would be a tax of $1000 on each side on one ES mini contract, or $2000 round trip. The ES would have to move 4,000 points just to cover the tax. If you went long tomorrow, it would take over a hundred years for the contract to move enough just to pay the taxes.

Quote from PocketChange:

It's to your advantage if you trade futures, options or any derivative contract

 

[PocketChange]

Nope:

Technically you only get dinged 1% when you take $'s out of your trading account. Your broker gets dinged 1% when you transfer $'s into your trading account (No doubt this 1% will be charged back to you or your trading balance will be adjusted). The trading activity inside your brokerage account does not generate direct $ transactions in your usd debit account. The trades are journal entries maintained on your broker's books. Your broker gets dinged 1% of any commissions they collect from your trading activity. The concept of long term.short term gains, carry over losses, wash sales are eliminated. All dividends and distributions will get dinged 1%.


Just like credit cards except only 1% gets collected from the receiving party at the time the $'s are cleared from the sending party's account.

Very simply system: The govt deducts 1% from the receiving party's USD Account as part of the transaction clearing system.

Each day the govt distributes the state portion of the fees it collects into their respective accounts.

For your specific example: If you fund your broker account with $25K your broker gets charged $250 leaving you a $24,750 balance. If you grow it to $100K and take it all out you only get dinged $1K. If you lose $10K and take $15K out you still get dinged $150.

Only funds that directly transfer through your USD account are subject to the transaction tax.

Quote from tomdavis:

Let's use round numbers to work through an example: The value of one ES mini contract is (ballpark) $100,000. Therefore, there would be a tax of $1000 on each side on one ES mini contract, or $2000 round trip. The ES would have to move 4,000 points just to cover the tax. If you went long tomorrow, it would take over a hundred years for the contract to move enough just to pay the taxes.