If you are a trader in securities exemptions will probably happen for you. This tax will apply to mom and pop who do a few trades per year. UK has the tax and an exemption as well. If the government goes all out and taxes everyone with the stamp tax then volume will probably go down by 95% IMHO. I know my 10 million shares a month would be pulled immediately and forget about the boxes who have razor thin margins as it is, they would be out just as quick.
The author of the NY Times article will think his idea is terrific unless posts against the tax make it into the comments section of that story. Consider doing a quick post there.
I wonder how they would calculate the value of a futures or other derivatives trade since one is not buying or selling anything with intrinsic value? They are better off just imposing a fee like the exchanges already do instead of a percentage tax.
It's interesting how most of the comments on that article's page show a profound ignorance of how the markets work. It seems like most of them are supporting it because it "sounds good."
I was thinking about that too. It would suck but I could handle a 0.50 per trade tax or something like that. But a percentage based tax would kill all the profit for day and swing traders. Without a doubt.
I think they will excempt the big banks from paying it - that way they finally have a new business model that works. 0.25 % is way too high but if many industrialized countries agree on it then it will be applied everywhere. And the public will applaude. I guess the spreads will widen but Banks will win and Governments will have another big revenue source. For me it would be the end unless i qualify also for an "excempt status" . But i guess thats evolution and you have to find another niche. I bet this Tobin tax will come soon ... good luck to all of you then.
jd7419 is right. In the UK they have this but let's be clear, you don't get exempt by being "a trader in securities" defined as trading a lot. You have to be a regulated entity. Very big barriers to entry. Ever noticed that there are hardly any independent full time traders over there and those that do exist are trading European futures, currencies or US stocks through a US broker. Notice how "spread betting" is big for the retail chump in the UK? They were invented to get around this tax and get the little guy in the game. These "CFDs" are really perpetual single stock futures that give the little guy leverage but with bid-ask spreads the size of the grand canyon. They are gambling products. It all depends on how they do this. My guess is they'll follow the UK example which will put the independent traders out of business but not the regulated institutions and that will include the newly regulated hedge fund industry. It's pretty depressing.
You can forget about the US of A being a market-based economy if this happens. We've obliterated every other form of advantage we had, why not the last standing Wall Street? sheesh, where's my passport...
What's shameful about this far left thinking is that they have this notion that traders conduct "non-productive activites." That's like saying that a "service economy" is non-productive. Like a service economy, traders and speculators are a necessary component. What is more, successful traders garner more disposable income than a 9-to-5-er. More disposable income means more premium products and services purchased - which often carry higher margins - which means more profit for the one selling the product or service. So much for the notion of "non-productive." In any event, the exchanges would fight this tooth and nail. Especially the futures exchanges whose profits are based mostly upon the number of transactions of contracts that have no intrinsic or lasting value - hence can hardly be deemed as assets. Their profits would see a precipitous decline should a transaction tax be imposed on derivatives whose notational value is significant higher than any other asset. In any event, I since a future is a contract and not an asset (the underlying is the asset) I suppose this idea will only apply to stocks, bonds and real estate. Even so, it will affect all markets and likely will be vigorously defended against by some of the aforementioned entities.