NYSE Euronext CEO Duncan Niederauerâs biggest worry is the looming possibility of a transaction tax. âI donât think anything could more clearly harm liquidity,â he says during a speech to the Financial Womenâs Association on December 15 http://home.globalcustodian.com/news/MTF/Exchanges/NYSE-Euronext-CEO-Hopeful,-But-Wary/36433
Quick one. Politics is all about stringing issues together to ultimately get what you want. Itâs good old fashioned horse trading and politicians are the best at it. Our current Democratic-controlled Congress wants a new successful clean energy economy, world climate control, and a US cap and trade system, perhaps tied in with a world cap and trade system too. Congress is trying to import cap and trade concepts from the EU, along with socialized or universal health care and more. Congress is very clever about stringing issues together to use momentum on one front to help another front. Cap and trade is languishing in Congress and their main goal at the EU climate conference is to give it new momentum. Secretary Clinton, Speaker Pelosi, President Obama and others are using the EU climate talks this week to show the world that the US is not putting sand in the wheels of climate control progress (as happened to President Clinton in Kyoto Japan in 1997). Itâs a game of chicken, who chickens out first the US or China in signing on to full compliance. No way no how can China play the undeveloped country card this time around. As in Kyoto, the US will not let China off the hook this time around. China is more developed than 10 years ago and a huge creditor country, perhaps the new richest country in the world. Certainly richer than the US these days. Notice how the EU and others strung together the issue of a global tax to the financial-transaction tax (its most cross-border like), and next to the climate control funding issue. Now the US team is stringing global funding to cap and trade rather than a financial-transaction tax (which they do not want). The US teamâs goal is to put a good face on for the world and pressure Congress to pass cap and trade in the US. Bottom line, the Democrats want a US coordinated cap and trade system with the EU and others, including China and India. As of now, in my view, itâs highly unlikely that the Chinese will comply with US requests for full compliance and transparency. And that prevents the US from signing. The US will walk away from the summit saying it will pass cap and trade and do its part. The US will also give a few billion from a general fund or cap and trade to the undeveloped world. We are not losing the financial-transaction tax to this easy horse trade deal.
Although this piece was a written a month ago in a London paper (and I apologize if this link has already been posted by someone else)...I was only just made aware of it...but there is a UK based organization called 'The Taxpayers Alliance' that is strongly against the Tobin Tax. I have asked them to step up the fight as the EU pro tax support seems to have gathered some momentum and hopefully their support will do our cause some good.. Please contact their UK or Euro wide operations to demonstrate your support for their work on our behalf. http://www.taxpayersalliance.com/me...oy-london-without-making-the-world-safer.html City AM: Matthew Sinclair: A Tobin tax would destroy London without making the world safer It is imperative that Gordon Brownâs proposals to levy a Tobin tax on financial transactions be defeated. Such a tax would be a disaster: it would endanger Britainâs economic interests and do nothing for ordinary taxpayers or the stability of the financial system. Championing such a scheme reflects a failure to engage with the real causes of the crisis and an obsession with grabbing cheap, easy headlines. Instead of this kind of posturing, we need politicians to start looking seriously at how bad policy drove the bubble and bust and what changes can be made to return the financial system to long-term stability. The original Tobin tax was designed to cushion exchange rate fluctuations. Economist James Tobin initially proposed a one per cent tax on short term currency trades. Since then, the proposed rate has fallen, most proposals now suggest about 0.1-0.2 per cent, but the scope has been expanded to include other transactions; because otherwise the tax can easily be avoided by trading via other cash-equivalent derivatives. Until recently, proposals for a Tobin tax had never seriously been taken up by anyone but anti-capitalist protestors and campaigns like War on Want. Some governments in Europe and Latin America had toyed with the idea, but none of the authorities responsible for major financial centres had ever accepted the argument for such a tax. Adair Turner, chairman of the Financial Services Authority, was swimming against the tide when he first floated the idea via Prospect magazine this year. FLOATING EXCHANGE RATES One reason why few have supported a Tobin tax is that worries about foreign exchange speculation have slowly subsided as more countries have moved towards floating exchange rates, which do more to limit the potential for exchange rate speculation than a Tobin tax possibly could. Attempts to fix rates such as â in the 1980s and 1990s â the European Exchange Rate Mechanism (ERM) meant that we got large and sudden movements in exchange rates when speculators sensed that a peg could not be maintained, rather than the more fluid shifts of today. The pound has collapsed recently, but that isnât the fault of speculators: rather, massive public sector deficits are primarily to blame, as is uncertainty about the UKâs relative performance in the years ahead. The whole idea of a Tobin tax is based on the flawed view that trading â or speculation â is a bad thing. The truth is that it isnât: it helps the process of price discovery, makes markets work better, enhances liquidity, ensures that resources are priced correctly and generally helps oil the cogs of the global economy. This pro-trading argument also applies to high-frequency trading, one of the practices that a Tobin tax would make much, much harder to sustain. Things only really go wrong when there is a bubble â and bubbles always require excessively loose monetary policy to form. And trading helps sustain tens of thousands of jobs in London. It is astonishing that Brown seems to want to destroy one of our key industries without making any proper argument against it. Many at the G20 seemed to think that a Tobin tax would provide compensation for the billions spent on bailouts. Some go as far as to claim that a Tobin tax of £5 on every £10,000 of transactions could raise £415bn a year. This, needless to say, is nonsense; there is no way such sums would be raised in this way. Markets would simply collapse, liquidity would go down and prices would become less accurate or take much longer to adjust. There would be lots of other problems. It is understandable that people want to see banks make some restitution to taxpayers who were forced to provide billions for bailouts. But putting in place a Tobin tax wonât make that happen. Professor Charles Goodhart has suggested banks will generally pass the cost of a Tobin tax on by widening their bid/ask spreads. The biggest price would ultimately be paid by ordinary borrowers and savers. Things would be even worse if a tax was put in place with any significant financial centre, perhaps Hong Kong, not included. Traders would quickly shift to the tax-free market and that would mean thousands of lost jobs in the City and lost revenues for the British exchequer, which would have to be made up by ordinary taxpayers. Such a risk to the British economy and the public finances would be an unacceptable price to pay . TAX DOESNâT ADDRESS CAUSES Instead of looking for new ways of paying for bailouts, we should be looking at how we can avoid the need for them in the first place. The last serious deposit bank failures in Britain were in 1878, when the City of Glasgow Bank and the West of England & South Wales District Bank failed. The idea that we should give up on the stability of the British banking system, when it was maintained through an entire century of wars and depressions, is absurdly defeatist. A Tobin tax doesnât address the causes of the financial and economic crisis. Its root cause was simply that too many big banks were too exposed to unreliable mortgage loans. When a housing bubble in the United States burst, those banks got into huge trouble and taxpayersâ money was used on a huge scale to keep many of them afloat. Reducing the number of financial transactions at any point wouldnât have changed anything (and many mortgage CDOs were held for long periods, not constantly traded). If Brown were serious about protecting ordinary people, he would start asking serious questions about whether there were any policies that drove the previously quite stable British banking system to need a bailout from the taxpayer. There are a number of ways in which government action made matters worse. In the build-up to the crisis policy often encouraged banks to take more risks. Low interest rates, in particular, encouraged both more borrowing and riskier lending. Regulation and activism in the United States promoted subprime lending. Even the housing bubble itself cannot be separated from policy decisions, as strict planning regulations make the supply of housing more inelastic and mean changes in demand are almost entirely reflected in prices. Once the crisis got underway, regulators performed poorly and made matters worse once again. The Bank of England complained that it was unable to support Northern Rock covertly thanks to EU rules. There were clearly problems at the Financial Services Authority and the Bank of England has been described as âflying blindâ with the tripartite system leaving it bereft of the detailed information on individual banks needed to maintain financial stability. Finally, regulations exacerbated the crisis. As far back as 2004, a study for the Board of Governors of the US Federal Reserve System had warned that Basel IIâs capital requirements would be procyclical. And, during the crisis, mark to market accounting regulations became deeply counter-productive: every one of the United Statesâ ten largest banks would have become insolvent in the 1980s had mark to market been in place at the time. Restrictions on short selling hurt hedge funds and prevented them from playing a part in limiting the crisis. Politicians should be looking at these issues, and trying to reform policy to reduce systemic risk. Working out how to pay for financial busts is a poor substitute for avoiding them. Fortunately, the Tobin tax proposal was shot down almost as soon as Brown had finished speaking. The Americans dismissed it immediately and the OECD said the scheme wouldnât work in practice as transactions are difficult to measure and a transaction tax is therefore easy to avoid. This proposal may just be one more embarrassment for Brown, and his laughable attempts to pretend he is leading the global response to the economic crisis. But it is yet another distraction from dealing with the real issues that we can ill afford. A Tobin tax is a bad idea. Politicians should move on to the real policy changes that are needed to make the global economy a safer place. Matthew Sinclair is research director at the TaxPayersâ Alliance.
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didnt see this posted but some good news, http://english.capital.gr/news.asp?id=874082 "Thirty-six members of Congress came out against a proposed tax on stock and derivatives trading, warning that it would drive up unemployment and undercut a shaky economic recovery in the U.S. Charging investors for trading stocks, futures, options and other instruments would also drive up the cost of credit and private investment for both businesses and governments..."
Today's podcast with table of contents (not edited yet) at http://www.greencompany.com/EducationCenter/InteractiveOnlineMeetings.shtml http://www.greencompany.com/EducationCenter/ConfCall/GreenTraderTaxConfCall121709.mp3 Carried interest repeal update. Financial-transaction tax fight. Are offshore funds safe from financial reform and tax efforts? Proprietary trading firm models and tax treatment. UBIT issues and unions going offshore with investments. Foreign accounts and Switzerland tax deals. White collar crime and attorney client privilege and more. 00:00 Carried interest repeal update. 10:00 Taxes are headed up on players in the financial industries. Carried interest, financial-transaction taxes, bonus restrictions or taxes, bank levies, taxes on upper-income, VAT taxes and a global tax. It's distracting and hindering for new investment and jobs. Carried interest is the low hanging fruit they are trying to pass first. The House said yes; let's see what the Senate says. The President agreed with the House. 12:30 UK City tax news. Tories versus Labor. How it translates in the US. 13:00 Financial transaction tax in the US and political update. Global tax efforts. 15:45 The House passes many bills to make a statement, but many may not pass as originally crafted. The window of opportunity is closing with the mid terms around the corner. The Republican strategy of no and delay. 19:00 Brent Gillett JD talks about the House and Senate Bills for Financial Reform. 26:30 G-20 discussions on offshore tax havens and preventing leaks in the dike of financial reform and global taxation. Should investors change their investment management business plans and are the days numbered for offshore funds? Pensions invest offshore to avoid UBIT which would apply in a domestic fund. Congress may repeal UBIT blocker tax rules so US pension funds can invest directly in the US. Isn't that better for US industry, rather than outsourcing all those financial and professional services to tax haven countries? Green points out that unions scream about loss of US jobs, yet they have union pension funds invest in offshore funds - sending all those related jobs outside the US. Unions are also a major backer of the financial-transaction tax and that makes no sense, since the tax will raise the investment costs of their union members (in those large pension funds). 32:30 How can traders react quickly to disruptive changes like offshore havens, a financial-transaction tax and more. Stay lean and mean and be ready to react. Prop trading firms may end up being exempt from financial transaction taxes as professional market makers. It's not expensive or hard to form a proprietary trading firm for your group of traders as non-customer broker dealer members of the Chicago exchange (CSX). 35:50 - Question on prop trading firm models. Green explains many of the business, legal and tax matters. How K-1 pass-through tax treatment works. Get reimbursement on expenses before year end or take UPE expenses on your tax return for all your own expenses. How to deduct losses. K-1 versus the 1099-Misc. model. How to handle retirement plans and local tax like NYC UBT. How the special tax allocations work. Solo 401k plans must be opened before year-end so act quickly now. Prop trading firm risks and how to manage them. 45:30 Question. Day trading IRA with futures and question about UBIT. A full overview on how UBIT is triggered. No UBIT on futures or forex. UBIT applies on margin interest in securities and also through pass-through K-1s like hedge funds and ETFs. 50:00 - Efforts to fight the financial-transaction tax. 51:40 - Question about Switzerland forex brokers and doing business in Switzerland and foreign countries in general. NFA's tougher new rules for forex brokers and hedging transactions are pushing some forex business to the UK and other foreign countries. How to do business abroad, special tax rules that apply and how to stay clear of tax and other trouble. Holding foreign currency is ordinary gain or loss not capital gains and losses. Forex traders can opt out of Section 988 ordinary rules and use capital gains and losses, even lower 60/40 Section 1256g treatment. Green's latest videos for Money Show cover these topics too. 61:30 - The IRS, SEC and government in general are turning up the heat on white collar criminals and tax infractions too, with much longer jail times and penalties. IRS-preparer penalties are effecting how accountants work. There are important differences between how attorneys and accountants work with their clients. Brent Gillett talks about insider trading and compliance. 72:30 - New Petition coming for our financial-transaction tax fight. Please sign it and pass the word. We really need your help!
somewhat good news coming from climate talks, no mention of TT but, "Mr. Sarkozy has underlined that he and Chancellor Angela Merkel of Germany are proceeding with plans for a âborder adjustment taxâ on imports from countries without targets and trading systems comparable to those in Europe." http://www.nytimes.com/2009/12/18/science/earth/18trade.html