Jump to content



Photo

The case for a trading tax.


  • Please log in to reply
46 replies to this topic

#1 johngeorge

johngeorge

    Member

  • TT Member+
  • 4,525 posts

Posted 18 January 2009 - 07:40 PM

http://www.portfolio...n-Stock-Trading


I am an advocate of a trading tax even back when George Bush Sr. sent out a trial balloon for one which, of course, was quickly shot down. (If I recall correctly the trial balloon lasted one day and was never heard from again :D ) Most on this board are opposed to ANY tax on trading which I fully understand, however, the tax would fall only on the user. Not unlike a gasoline tax, toll tax, telephone tax, etc. The tax need not be .0025% on the total transaction. Actually a flat fee user tax of say $20 per transaction would be acceptable to many I believe. With trillions of debt it is well understood taxes will be raised for the many. IMO this is one of the least egregious ways to raise revenue.

Good trading to all.
Peace
johngeorge

#2 dasein

dasein

    Member

  • Traders-Talk User
  • 7,587 posts

Posted 18 January 2009 - 07:48 PM

closing the barn door after the horses have left- the IBs have changed to holding companies, they are leaving trading behind - so it is now OK to start imposing a trading tax.
best,
klh

#3 selecto

selecto

    Member

  • Traders-Talk User
  • 6,871 posts

Posted 18 January 2009 - 07:56 PM

Isn't the most trading volume accomplished by instutions managing pension, retirement and savings in the numerous funds? Wouldn't that mean that the most taxes would be paid - ultimately - by main streeters?

#4 U.F.O.

U.F.O.

    U.F.O.

  • TT Patron+
  • 5,605 posts

Posted 18 January 2009 - 07:59 PM

Most of the equity trading volume in the past 20'ish years has been program trading. Definitely not driven by "main street" account managers. U.F.O.
"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!"
~Benjamin Franklin~

#5 Data

Data

    Member

  • Traders-Talk User
  • 2,522 posts

Posted 18 January 2009 - 08:07 PM

When India set up its 0.10% transaction tax, they simultanously lowered the capital gains tax rate to 0% for net profits on sales of long-term holdings and to 10% for net profits on other sales. Many other countries have similar setups. It would not necessarily reduce turnover but the low tax rates on profits would make it easier to get rid of Roths, IRAs, 401Ks, and other special accounts. The removal of the tax deductions would raise 80 billion dollars per year. Investors could combine their various accounts which would also result in efficiencies for brokerages and funds.

Edited by Data, 18 January 2009 - 08:08 PM.


#6 James Quillian

James Quillian

    Member

  • Traders-Talk User
  • 1,364 posts

Posted 18 January 2009 - 09:20 PM

It makes sense to place the heaviest tax burden on those who benefit the most from government.
Tax the rich at a very high rate and government will shrink in size. Then the tax burden on everyone will fall.
I doubt that a transaction tax will accomplish that. Chances are a transaction tax would be as heavy a burden on small investors as on the huge institutions that have a hand in formulating public policy.

James



http://www.portfolio...n-Stock-Trading


I am an advocate of a trading tax even back when George Bush Sr. sent out a trial balloon for one which, of course, was quickly shot down. (If I recall correctly the trial balloon lasted one day and was never heard from again :D ) Most on this board are opposed to ANY tax on trading which I fully understand, however, the tax would fall only on the user. Not unlike a gasoline tax, toll tax, telephone tax, etc. The tax need not be .0025% on the total transaction. Actually a flat fee user tax of say $20 per transaction would be acceptable to many I believe. With trillions of debt it is well understood taxes will be raised for the many. IMO this is one of the least egregious ways to raise revenue.

Good trading to all.



#7 ...

...

    Member

  • Traders-Talk User
  • 509 posts

Posted 18 January 2009 - 09:21 PM

this is one of the least egregious ways to raise revenue


:lol: :lol: :lol:

So, less information available to market participants is a good thing? Less liquidity and larger bid/ask spreads are a good thing? Less ability to allocate capital efficiently is a good thing?

Any "trading tax" is one of the MOST egregious ways to raise revenue.

The reason is very simple. The ONLY way that standards of living increase is through increases in productivity. The ONLY way that productivity increases is through capital investment. Obviously, anything that discourages capital investment will be to the detriment of productivity and standards of living in general.

Very, very bad idea. You wanna tax something, try consumption.

#8 ...

...

    Member

  • Traders-Talk User
  • 509 posts

Posted 18 January 2009 - 09:24 PM

Tax the rich at a very high rate and government will shrink in size. Then the tax burden on everyone will fall.


What are you smoking? I want some.

:lol: :lol: :lol:

#9 johngeorge

johngeorge

    Member

  • TT Member+
  • 4,525 posts

Posted 18 January 2009 - 09:46 PM

I am a long time advocate of the Value Added Tax. That is the only consumption type tax I endorse. The sales tax is the most egregious of all taxes as it falls hardest on those with the least ability to pay.

The only statistic on program trading I could find on short notice is the one listed here: Appears to me that program trading was about 30% of all trades on the NYSE in 2007. Hardly productive. Raises no new capital; rather it lines pockets of large banks, brokers, and provides obscene bonuses to their management.

Regards impairing capital...................hmmmm I hardly think $20 will impair or opaque much of anything. Just my take.




this is one of the least egregious ways to raise revenue


:lol: :lol: :lol:

So, less information available to market participants is a good thing? Less liquidity and larger bid/ask spreads are a good thing? Less ability to allocate capital efficiently is a good thing?

Any "trading tax" is one of the MOST egregious ways to raise revenue.

The reason is very simple. The ONLY way that standards of living increase is through increases in productivity. The ONLY way that productivity increases is through capital investment. Obviously, anything that discourages capital investment will be to the detriment of productivity and standards of living in general.

Very, very bad idea. You wanna tax something, try consumption.





Peace
johngeorge

#10 James Quillian

James Quillian

    Member

  • Traders-Talk User
  • 1,364 posts

Posted 18 January 2009 - 09:50 PM

Tax the rich at a very high rate and government will shrink in size. Then the tax burden on everyone will fall.


What are you smoking? I want some.

:lol: :lol: :lol:


The trick is not to smoke anything, then what is obvious starts to make sense.