"The taxâs proponents actually have a few decent arguments in its favor. Average investors in individual stocks would not really feel the impact from the tax â deep discount retail brokers like E-Trade and Scottrade would probably just eat the tax amount on most trades â and tax would, nonetheless, raise a significant amount of revenue." Somebody obviously failed math in school. So E*Trade is going to charge the customer $9.99 to place the trade, and then eat a charge of ($100 x 1000 x 0.001 =) $100 when that customer buys 1000 shares of a $100 stock. Awesome analysis, you stupid retard. Some people are so dumb it's unbelievable. This is a guy who's actually arguing AGAINST the tax - does anybody in the media actually use their brains?
After further cosideration I think the best way to argue against this tax is from the viewpoint of the 180 million investors in this country. This was posted on one of the blogs and has many good talking points. Consider the political fallout from this tax. 180 million investor class has their life savings invested in 401k's, IRA's, Mutual funds, and money mangers. Most of them are middle class and are saving for retirement.Self directed investors will see through this "small " tax right away. They are very aware of the affect transactions costs have to their yearly returns. They will be the loudest early on. They question how you can charge a tax on trades and investments placed in a tax free or tax deferred account like an IRA or 401K and provide evidence from their own accounts how much this tax really is. Obama promised no new taxes on those making under $250k. Remember Bush 1 "read my lips no new taxes"? This is a tax on their retirement accounts and life savings which will go over like a lead balloon. It will not take very long for the passive investors (those investing via mutual funds, money mangers, pension funds) to see through selling points, like this is a tax on wall street speculators. They will find out very quickly that their returns in these funds are being being fleeced by the government to the tune of $50 billion per year and they will revolt in a major way at the ballot box. On the surface it sounds like a small tax, but when you dig a little deeper you will find these institutions make millions of transaction on behalf of their investors every year. The average mutual fund turns their portfolio over at least once every year, money managers are often more active. As is always the case the tax will be passed along to the investor. This tax will be levied even when they lose money on an investment adding to losses in bad years. To add insult to injury, the big Wall Street institutions will more than likely be exempt as they are in the UK. The majority of this tax will fall on the shoulders of small mom and pop investors, trying to save for retirement.
If traders really cared they could easily defeat any attempts at a transaction tax. Simply put, stop trading. I'm talking about hedge funds, institutions, specialits, market makers, everybody. Imagine the chaos. 5 dollar spreads on msft should be fun.
I happen to agree. Here is my post from March 3rd on page 135 of this thread: If I wasnât concerned that it would bring unwanted attention to this issue, I would suggest you enterprising traders start a campaign for a demonstration day. If this tax was passed as proposed then every prop firm would be out of business overnight, and all the exchanges and brokers would be hurt significantly. Simply get as many traders as possible to agree to take a specific day off in the future to make a statement. Get CNBC, FOX, Bloomberg to report on it and if it gathers steam all the news outlets will pick up on it. If the majority of traders simply refused to trade for one specific day then everyone would see how much volume would be reduced. If the idea takes hold then many institutional traders would probably refrain from trading also, just like they do when on days you know nothing will happen like the day after thanksgiving. Make the day a Friday and most will just take a long weekend. Contacting your representatives in Washington is a nice idea, but it wonât make any difference if they want to pass it.
foolish pipe dreams like the one above is the reason the transaction tax can pass. in a business where traders, mm etc. would sell their mothers for a penny the above scenario would never happen
Actually you do have a point in that institutional market makers would feast on this and would gladly make a huge spread all day long, they would probably be exempt anyway.
Take one day off, or lose your job forever if you are a frequent trader. You donât have to get a lot of traders to agree just a number of big ones. If the spreads go wide, what possible difference would that make? The only thing you care about is reducing overall volume on that day so the tax revenue estimates would come down to earth. I am a swing trader and could actually afford this tax so at first when all you guys are shut down I would make a lot, then the market would dry up and there would be little opportunity for anyone.
This is not going to be good for anybody! You can speculate all you wish on how it may help you or not, but it's all pure spec. Who knows how this will change the face of the market, and impact your bottom line. Or even your LIVELIHOOD ! What will you do if your system that you worked on for last DECADE no longer works because volume just dried the f^ck up, permanently? This has to be stopped, now! Nipped in the bud! Once passed it'll never be repealed in your lifetime. Don't anyone take this lightly. This is a serious threat to the market! This is war, a battle for your livelihood. treat it as such!