New tax on equity trades in the U.S.?

[dcarrigg]

Bail out banks - mark to model madness - and now this? Seems like a broad brush to me that won't go after the root of the problems that created this mess. Not that the deficit couldn't use the revenue...

It would tax futures contracts, swaps and credit default swaps at a rate of 0.02 percent and stock transactions at 0.25 percent. Options would be taxed at the rate of the underlying asset.

[LargoWinch]

Re: New tax on equity trades in the U.S.?

Bail out banks - mark to model madness - and now this? Seems like a broad brush to me that won't go after the root of the problems that created this mess. Not that the deficit couldn't use the revenue...

wait dcarrigg, it gets better:

Time to Tax College Tuition? Pittsburgh Mayor Thinks So
Tuesday,
Dec. 1st 2009 18:40
The city of Pittsburgh is abuzz over the announcement of Mayor Luke Ravenstahl’s proposed plan to institute a 1 percent tax on college tuition for the 2010 budget.

Calling the revenue enhancement the “Fair Share Tax,” Ravenstahl has estimated the proposal could raise as much as $16 million for the city. And while conservatives would insist this is just another case of taxing anything that moves, Ravenstahl sees it otherwise.

Article here.

[Rajiv]

Re: New tax on equity trades in the U.S.?

This is a version of the Tobin tax, IMO a good thing

Tobin taxes...
how to tame hot money and fund urgent global priorities...

What are Tobin Taxes?

They are simple sales taxes on currency trades across borders. The original proposal came from James Tobin, Ph.D., a Nobel laureate economist at Yale, but economists have since refined his approach. Tobin Taxes can be enacted domestically by national legislatures, but will require multilateral cooperation to be effectively enforced... Political will for passage is the major obstacle to be overcome, by citizen mobilization...

The proposal is important due to its potential to prevent financial crises. Also, the estimated $100 - $300 billion per year makes it possible to meet urgent global priorities, such as preventing global warming, disease, and poverty. Help turn the tide towards global solutions in the 21st century...

How Tobin-style Taxes would work:

• Currency speculators trade over $1.8 trillion dollars each day across borders. The market is huge, and volatile.
• Each trade would be taxed at 0.1 to 0.25 percent of volume (about 10 to 25 cents per hundred dollars)
• This would discourage short-term currency trades,about 90 percent speculative, but leave long-term productive investments intact.
• The currency market would thus shrink in volume, helping to restore national economic autonomy. Nations again could intervene effectively to protect their own currency from devaluation and financial crisis.
• Billions in revenue, estimated at $100 - $300 billion per year, would be generated.
• Revenue could go into earmarked trust funds to fund urgent international priorities.

Here they talk of currency transactions. But similar problems occur in highly leveraged instruments like futures and options -- leading to extreme market volatility, when coupled with highspeed computerized trading. A transactions tax like the Tobin Tax will put a break on unnecessary high frequency trading, but does not really impact longer term trades.

[dcarrigg]

Re: New tax on equity trades in the U.S.?

This is a version of the Tobin tax, IMO a good thing

Here they talk of currency transactions. But similar problems occur in highly leveraged instruments like futures and options -- leading to extreme market volatility, when coupled with highspeed computerized trading. A transactions tax like the Tobin Tax will put a break on unnecessary high frequency trading, but does not really impact longer term trades.

You have a point here, microsecond program trading will be the big looser in this scenario. Longer term trades would not pay such a big price in the grand scheme of things. It would not affect IRAs and the like either. Still, it is a tax that is for most purposes progressive, but still flat and affecting small-time retail traders.

[dcarrigg]

Re: New tax on equity trades in the U.S.?

wait dcarrigg, it gets better:

Taxing tuition, which comes from income already taxed, seems like a serious disincentive to something positive. Taxing trades is one thing, but tuition! This just seems like bad policy on every level.

Also, I think it was in 2008 that Sect. 127 of the Internal Revenue Code called for taxation of tuition waivers for graduate students.

[skidder]

Re: New tax on equity trades in the U.S.?

You have a point here, microsecond program trading will be the big looser in this scenario. Longer term trades would not pay such a big price in the grand scheme of things. It would not affect IRAs and the like either. Still, it is a tax that is for most purposes progressive, but still flat and affecting small-time retail traders.

And getting back to the topic at hand, tuition taxes. How the fuck does that do anything other than suck the financial lifeblood out of families for yet one more revenue stream for states to piss away in yet another foolish endeavor? It freakin insanity! Here's the deal, stop spending ya fuckin crooks!!!!

[medved]

Re: New tax on equity trades in the U.S.?

You have a point here, microsecond program trading will be the big looser in this scenario. Longer term trades would not pay such a big price in the grand scheme of things. It would not affect IRAs and the like either. Still, it is a tax that is for most purposes progressive, but still flat and affecting small-time retail traders.

All this taxes and micromanaging are completely moronic. First they create hot money by shoving insane amounts of debt into everybody's throat and then they worry that the hot money is hot. Of course it is, because they heat it up all the time.

This is a typical commie idea about managing everything at every step. If they eliminated the Gosbank and the criminal system of fractional reserve banking, there would be no need for micromanaging, simple regulation would be enough. But no, they want to keep the printing presses running and the Gosbank functioning as the lender of last resort for the losers. Of course the losers will turn into abusers, they don't risk anything. There is no way Gosbank or Gosplan can regulate them.

[charliebrown]

Re: New tax on equity trades in the U.S.?

as long as it is really low. I write monthly covered calls on small postions. I don't want to see that income stream chiselled away. If you want to go after flash traders, day traders ok. I guess I'm throwing day traders under the bus

Do agree with med-ved. they want hot money, they got it. too much micro-managing. why do i have to think about the tax implications of every trade? It's mind numbing with wash sale rules, tax brackets, deduction phase outs etc. Some trades I just don't do because I dont
want to have to keep a darn piece of paper for a year for tax purposes.