1/4% Tax on all stock trades pushed in NY Times today

The author (Robert Weissman) apparently has an agenda.
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Ahhh now I see!!

 

Green's response to
The Hill's article "A speculation tax would make Wall Street pay for damages" By Robert Weissman of Public Citizen 12/08/09 07:34 PM ET
http://thehill.com/opinion/op-ed/71319-a-speculation-tax-would-make-wall-street-pay-for-damages

This article from the President of Public Citizen is very one-sided on the spending side, with usual lack of understanding of the real business of investing and trading. Its traditional and non-credible bashing of the rich - who have money and therefore trade/invest it and (the tax grabbers figure) can afford to give some of the crumbs (this financial-transaction tax) for their utopian ideals. Public Citizen’s Web site features campaigns for single-payer health care and green energy, just to name a few of their popular progressive or socialist programs. As Ayn Rand the collectivist-utopian hunter liked to say, “Check your premises.” This writer’s Hill article has all incorrect premises. Here they are one-by-one.

“Americans have a right to expect Wall Street to pay.” Wrong, Americans and their elected politicians should bear some responsibility too; for forcing banks to lend money to creditors who had no reasonable expectation of paying back those loans. The government fostered CDOs by structuring government GSE’s Fannie and Freddie to buy those toxic assets and they covered up the problems in these GSEs for over a decade. Wall Street has paid back TARP with great dividends and maybe it’s time to start throwing your stones at some others now.

“A speculation tax — a sales tax applied to stocks, derivatives and other financial instruments — is an ideal way to make this happen.” Wrong, a speculation tax of this kind puts most small-business speculators (market maker traders) out of business. If you are targeting Wall Street, please understand that investors and traders are not Wall Street big banks and TARP recipients. Killing off speculation will surely lead to poorly-priced markets, which costs everyone dearly in higher purchase prices and lower sales prices. Secretary Geithner pointed this out over the past weekend by saying retail investors would ultimately bear the brunt of this misguided transaction tax. Read the economic benefits of speculation on Wikipedia.

“First, it can slow the churning of stocks and financial instruments on Wall Street.” Speculators make markets and give up-to-the minute and fair pricing to all users of the financial markets, which include investors, traders and farmers and manufacturers hedging their products.

“Too much of Wall Street’s business is based on lightening trades to capture very small margins.” How is this any of his utopian business, if traders are doing their job to provide fair market pricing and liquidity and using the latest technologies and systems in doing so? America leads the world in financial market innovation leveraging America’s leadership in technology (whose biggest customer is Wall Street). Does this writer want to trash that innovation and both of America’s top industries? Wall Street saved itself and paid back TARP, saving our economy during this fragile recovery mostly from trading profits. So why now kill this golden goose, just so this utopian can fleece more rich people to pay his non-profit bills for a single-payer health care system which most Americans said they don’t want? Stop dictating what’s right and wrong for business as a socialist who holds out a cup for donations.

“This business contributes little or no social value — it does little to advance the efficient allocation of capital that is Wall Street’s purported social contribution.” Wrong again, it provides value to the trader, who pays taxes to society. And again, speculator market makers are the most important element of fairly priced markets. Please stop telling people to live for your social utopia only and disrespect their natural rights to an individual livelihood that is legal.

“But it has major downsides, especially because it relies on high degrees of leverage that put financial institutions at risk — and, worse, endangers the entire financial system.” Wait a minute, aren’t you asking for leverage to be given by banks to borrowers with shaky social/business? Did you complain for the several decades of the up years with profits and taxes to our US Treasury, based on using leverage? If you don’t want leverage, then why give an interest expense tax deduction but not a dividends-paid deduction, favoring debt over equity?

Part II next

 

Part II to Green's response to The Hill article

“Vanguard founder John Bogle says he “loves” the speculation tax. “The tax costs to traders are basically zero”.. What a complete lie from a mutual fund founder who doesn’t like investors trading on their own and prefers passive buying and holding of his long-term mutual fund investments. This tax for very sure puts all our trader clients and active investors out of business over night. If you don’t believe me, read the thousands of small-business investors and traders comments on our Petition at http://www.rallycongress.com/greentradertax-traders-association1/.

Proponents of this tax keep talking out of both sides of their mouth. First it’s “tiny” and just crumbs, and next it raises 150 billion dollars (a huge amount of tax revenue). A good portion of those dollars won’t come from big Wall Street banks but from the hides of traders and investors of all types – retirees, housewives, unemployed, part time, out of school, early retirees and many more – all scratching to add to their living. Plus, you won’t even collect the taxes from these people, because you will force them out of business. Supply-side economics hits Main Street.

This is the fundamental blind spot of socialists. Squeeze 150 million dollars out of the business marketplace and think you can call it tiny, just crumbs that no one cares about. It’s the businesses life blood of investors and traders, and killing those businesses has a trickle down effect and multiplier. Your really end up sucking 500 billion or more out of taxpayer’s pockets and that can tank our fragile recover. If you want green energy to take off, make it a great business. Don’t force-feed it down consumers’ mouths with overly generous subsidies and tax breaks. There aren’t many buyers. Learn the basics about supply and demand and a good business environment, which is not think tank utopians dictating what’s good business from high on top of the mountain.

“Third, the speculation tax would be extremely progressive. It is self-evident that it is the richest Americans who trade stocks the most. The richest 1 percent of Americans own about 40 percent of the stocks; the top 10 percent own about 80 percent. “ Wrong again, 90% of our trader and investor clients are not rich and they are scratching to make a living or add-on to an insufficient living. Your tax puts them on bread lines since they don’t qualify for unemployment insurance (even the Stimulus extended ones). This is the most non-progressive tax proposal I’ve seen yet, which is generally the case for sales taxes. Traders pay short term capital gains and they don’t benefit from lower long-term capital gains tax rates. This tax is not robbing the rich to pay the poor. It’s putting the middle class out of business and then not even giving them a social safety net. It clearly is a job destroyer not a job creator of financial service industry jobs, which usually also then kill off several Main Street jobs too (professional and personal services, retail, food, beverage, construction and more). Again, I wouldn’t expect a utopian think tank President who survives on charity (hand-outs) from altruists to understand the raw aspects of business and taxation. One thing they know very well is that they enjoy tax-free status as non-profits and many of these institutions abuse that tax-free status too.

“Opponents of the speculation tax sometimes say it will drive financial business overseas. This is implausible. The United Kingdom currently maintains a financial transaction tax, and has been gaining not losing business over the past decade.” Wrong again. The U.K. has exemptions and income tax credits for its stamp duty tax. More importantly, the UK built up its money-center credo by allowing non-domiciled residents to be totally tax-free on offshore investment accounts. This stamp duty was their only way of getting some tax from these non-domiciled residents living in the UK. So you can’t compare UK oranges with US apples. In the US, we tax everything on a worldwide basis, and there are no credits or material exemptions in this tax bill. Plus, just wait 6 months while the UK implodes further over their even angrier populism against bankers. UK hedge funds are fleeing to Switzerland, who like Singapore will never pass this crazy tax. You got the other facts wrong too. Germany’s left-leaning candidate for Chancellor lost the election by recommending this tax (among other socialist ideals) and Chancellor Merkel’s government said an absolute no to this tax too. Bur rest assured you can always count on the socialist guiding light of the world France to carry your torch. They want a global currency tax to pay for climate change.

Before the US trashes its economy and financial services in passing unilateral legislation on climate control and a financial transaction tax, it should wait for the entire world to do the same in consensus. That will probably not happen anytime soon, but we can offer to play nice in the world and work towards these ideals together. Kudos for President Obama, Secretary Geithner and leadership in Congress and the administration to saying no to this progressive-grab-at-the-money tax now, before waiting for global consensus. It’s just not well thought out no matter how much you use think tank credentials to put lipstick on that pig.

You ended your piece with - “Steeply progressive, revenue generating and well-targeted, look to the speculation tax as one of the big ideas of the coming year.” Wrong. It’s steeply non-progressive, revenue and job killing and a shot-gun approach to hurt retail investors of all stripes. Listen to our wise Secretary Geithner and the IMF who suggest consideration of a bank levy on banks instead. That would be “steeply progressive, revenue generating and well-targeted.”

 

"A Transaction Tax Would Hurt All Investors"

http://online.wsj.com/article/SB10001424052748703558004574579903734883292.html?mod=googlenews_wsj

-Guru

 

They got an evening host, Ed Shultz, on MSNBC. He had DeFazio on today. Shultz is making this damn tax his big thing now. Thank heaven MSNBC has low ratings.

 

Anything new come from the interview or just a rehash of the same old stuff? I wish they would quit giving this thing airtime

-Guru

 

Same garbage, only DeFazio went on to detail about how investors and others won't be hurt. DeFazio then went on about how we had the tax in the past and nothing bad happened to the market. Shultz, then DeFazio then tag teamed on the whole job building part. They kinda weren't that pushy on revenue generation, but more on as jobs bill.

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Thanks for posting that - I liked it when Ed ask him if the tax had the support of the White House and Defazio laughed and then said something about Geithner being cool to it....

-Guru

 

Good news here. ...for now.

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Hoyer Opposes Global Tax on Financial Transactions Because It Isn’t Worldwide Yet
Wednesday, December 09, 2009


(CNSNews.com) – House Majority Leader Steny Hoyer (D-Md.) said he does not support a proposed tax on financial transactions, such as stock trades and futures contracts, because it has not been globally coordinated yet. However, he agreed with House Speaker Nancy Pelosi (D-Calif.) that such a transaction tax should be worldwide.

http://www.cnsnews.com/news/article/58251


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As an aside, look at the amazing slant the author uses in writing this story. In the pasted paragraph shown above, the columnist writes that Hoyer said the transaction tax "should" be worldwide.

But then read the actual quotes from Hoyer inside the story. He says the tax would only be workable IF it was coordinated globally. He doesn't say it "should" be done, he says it's a condition for his backing.

Also, the headline says the tax isn't worldwide "yet". That implies it's coming & is on its way.

The editor's bias is screaming in that article.

A few comments to that story & especially its writer would be useful. Such comments directly to the writer may help ensure future stories written by him aren't done in a way that give the appearance that the tax is closer to enacting, which emboldens the pro-tax crowd, than is in reality correct.

This page is available as well to voice your viewpoint. http://www.cnsnews.com/public/contact.aspx

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