According to the WSJ: But Mr. DeFazio's bill would tax transactions by U.S. citizens no matter where they occur. To escape the tax, he says, people would have to move their citizenship, not just their money. http://online.wsj.com/article/SB100...4604053568517692.html?mod=igoogle_wsj_gadgv1& This is not a tax on profits or income, but on each and every trade transaction. How is Defazio going to collect on a transaction tax on Americans who trade on foreign exchanges? It will be so cumbersome for that foreign brokers won't accept American investors! lol
http://www.ft.com/cms/s/0/06a8cade-ecc6-11de-8070-00144feab49a.html ft writer seems interested in smaller tobin tax instead of bonus taxes. The uk seems desperate for new tax revenue and does not want to chase bankers out with the bonus tax. Lowering the transaction tax rate may make it more palatable for some but we know that is a slippery slope and a bad idea. Notice comment about little prospect for UK bank income taxes with loss carryforwards and a preference for a revenue tax - a transaction tax. When profits are down government budgets call for revenue taxes and VAT. UK news remains threatening and escalating for a transaction tax. I think we are still okay on the US side. Link came up on google alerts which I get every night at 10:30pm et. From iPhone
I don't like the tone from the above article (especially coming from the Financial Times). I guess the entire world is waiting to see what the IMF comes up with in their report in April of 2010. The UK Treasury has indicated it's going to wait until the final IMF report is released which is slated for June 2010 - by that time Gordon Brown should be out of a job. At that point I can't see the UK enacting this tax. -Guru
Financial Times is the paper for big bankers with bonus pay? Transaction tax affects all investors, large and small - even when the investor has no gains! Bonus tax only affect the big bankers with big bonues.
This is a good read from the Hindu Business Line: http://www.thehindubusinessline.com/2009/12/21/stories/2009122150490800.htm "The initial reaction of the Managing Director of the IMF, Mr Dominique Strauss-Kahn, to the proposal was predictably negative. He took the view that it was not easy to implement . But, the manner in which the proposal is gaining support among various countries in Europe and Latin American, may lead Mr Kahn to change his view in due course. One has to see whether the influence of developed countries on the IMF prevails over that of poorer countries, which need capital flows to balance their account."
If the alternative considered by the IMF is insurance paid directly by the insured (i.e. mostly Western banks), countries without internationally significant banking sectors such as China or India would oppose any tax designed to inhibit capital flows (transactions mean not only outflows, but also inflows). Let's hope other developing countries join in and point out they should not be bearing the cost of insuring Western banking sectors against systemic risk. How fair would that be if the IMF collected a tax on trading of emerging markets ETFs just to pay it out later when the next overleveraged US bank blows up. Of course a performance bond ('margin') cannot replace insurance paid over longer time, because banks positions are too big and too illiquid for margin call liquidations... so the protection must come from long term 'emergency' funds. The IMF is definitely the oracle to watch, because it is the insurance against systemic risk in the banking industry that may eventually bring 'it' on, not global warming. With respect to global warming, carbon credits markets have been again re-confirmed as the most important funding source - in Monday's Today programme, where 'our man' at the BBC, Evan Davis, interviewed the managing director of the European Climate Exchange (http://www.ecx.eu), who claimed that by 2020, the carbon futures market will have larger volumes than crude oil today. So here we have at least one liquid market, which the IMF could not humanely try to tax without a huge outcry from the developing countries ('Solomon Islands drowned to bail out Wall Street banks'. Conflicting interests between the environmental funding requirements (market-funded) and banking sector systemic risk insurance via a Tobin tax (market-stifling) are sufficient to make the Tobin tax unworkable, because if one liquid international market is exempt... then here we go: even without India's dissent, another weak link in the chain is there, enough to make Mr Tobin turn in his grave. Traders are good for the economy, Mr DeFazio, so stop fighting them now or else you will make CO2 polluters grin with glee... again, like that Thursday's selloff in the carbon markets presented to them by the bickering politicians in Copenhagen
Lord Stern (the economist who produced an influential political document on climate change, see http://en.wikipedia.org/wiki/Stern_Review) has just reconfirmed on air (Radio 4's Today Programme) that carbon markets are *the* source of anti-global warming funding, BUT added "that's the *international* source, but nationally, we need to bring 'other measures'... Mind you, the UK already has a TTax (Stamp Duty), so he meant something else (surely not a hike from their already ridiculously high 0.5% rate, or withdrawing the TTax exemptions for derivatives, Forex and CDFs!