Between 30 and 40% of participants in the stock markets are "pattern" or retail daytraders. The rest are institutional traders, many of them with algorithmic systems. And they sure wouldn't be hired if they wouldn't make any money. The markets are the only place where you learn how to trade. and yes the failure-rate is high. On average it takes about up to 10 years until the retailtrader will make consistent gains. So take that experience away (they've already done that partly with the pattern daytrading rule). How do you like it when you be told what to do, how to do, how to live, how to learn, and then how to earn your money? Go ask the Russians. The money invested in all markets comes from already taxed net income. You don't learn how to trade in school. In school, the only thing you learn about trade is how you can steal by legislation from those who make it better. So there's nothing to laugh about. If you wanna laugh, keep in mind that throughout history it is proven that whenever the poor wanted to "punish" the rich via a social system, it backfired. The taxes got higher, the poor got poorer, and rich went away. The rules may change, but the game will still be on. And governments won't make any more money on that transaction tax because traders will make less trades then and adapt. So the only reasoning behind this is pure ignorance or the will for destruction.
I've just contributed a short analysis showing how quickly the Laffer curve peaks in case of the Tobin tax. The British case shows that it would be essentially pointless (no additional revenue would be raised) to tax US stock transactions at a rate exceeding the current level of marginal transaction costs. Preferrence for 'volume-neutral' Tobin tax rates was already expressed by the IMF (see Spahn, Paul, 1996. The Tobin Tax and Exchange Rate Stability; Finance and Development 33 (June), 24-27, which was also incidentally the likely source of the now painfully obsolete 0.02 tax rate proposed by DeFazio for futures). Here's the abstract of my analysis: "This article uses a simple heuristic method of Campbell and Froot (1994) to estimate a 'volume-neutral' Tobin tax rate for US equity transactions (i.e. one for which static tax revenue projections are very likely to be realized in practice), on the basis of the existing marginal cost of stock market participants (proxied by the lowest retail brokerage commissions). The main finding is that a 'volume neutral' tax rate of 0.014% would raise the same amount of tax revenue ($14 billion dollars anually) as a 'normative' (punitive) tax rate of 0.250% (11 to 19 billion dollars anually), but without the need to drain a significant proportion of the existing liquidity from the markets." As you see, the $150 figure sponsored by the DeFazio camp was more or less 10 times overestimated, simply because it was 'static', unrealistically assuming no behavioral response at all... no tax avoidance whatsoever, no CFDs, no overseas trading, no offshoring, no binary options... how likely is that? I mean they should know better... they have the British case. Even research shows (see e.g. a Jackson and OâDonnell, 1985 and Ericsson and Lindgren, 1992) that a 10% increase in transaction costs would reduce taxable volume by 10-17%! This could be even partly responsible for this year's reduction in market volumes (the SEC 'Section 31 fee', which can be treated as a transaction tax proxy, has been hiked 5-fold from its 2008 level. Luckily next year it is going to be cut by half). Happy New Year everyone!
so you see, the main question is how to most effectively collect the most tax without hurting, then sell it as benevolence. 0.014% is what the Germans already have. It never was talked about with the traders, it never came up in the news, only small articles in financial papers, then from one day to another brokers announced they had to raise their commissions. Then by and by traders wandered off to other markets. And at the very last G20 meeting that goddamn woman of a german chancelor A Merkel pushed forward the idea of making this transaction tax a global thing. The taxes governments are collecting are non-essential if you see how deep they get in debt and spend money for bullshit. The banks must pay their bailout money back or shut down. Then this Wall-Street-must-pay-for-Main-Street talk must end.
... and another one Abstract. If the Tobin tax in treated as a special case of a "sales tax", it becomes possible to estimate a "fair" tax rate for the financial transactions tax, one which would equalize the tax burden imposed on financial firms with that already borne by the Main Street. A 'fair' transaction tax rate should place exactly the same tax burden on stock trading firms as the sales taxes currently imposed on the Main Street, i.e. the same 5% ratio of the average sales tax to the average markup. So a fair tax rate, equalizing tax burden on the Main and Wall Street would be 0.000025, i.e. 100 times lower than the 0.25% rate proposed in the US by Peter DeFazio. BTW. Good news from the Wiki front - the Wiki Patrol accepted our edits unconditionally ("Debate: I re-arranged existing material without changing any of it."), I'm so glad we finally prevailed over the bystander effect And special thanks to Benwm for the Swedish case! I did not realize options can simply disappear completely under the Tobin tax... So Timber Hill - it's time to put some of your blood money to good use
just a refresher click on this link to make a compromise http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/
I left the german markets in 1999. Back then most stock brokers had a flat-commission of 5 euros per trade. Then during chancelor Schroeder the transaction tax got introduced, somewhen around 2002. Today in Germany ETrade with a 14.99 flat per Trade is cheaper than IB. Most brokers charge you the percentage on the total value bought or sold.
Today's WSJ Editorial http://online.wsj.com/article/SB10001424052748703939404574566034074899214.html Democrats are candid, at least in private, about the kind of the deal they have mind this time around. Democrats would agree to means-test entitlements, which means that middle and upper-middle class (i.e., GOP) voters would get less than they were promised in return for a lifetime of payroll taxes. Democrats would also agree to cut appropriations by two or three percentage points and live under pay-as-you-go budget rulesâthe same rules Democrats promised to live by in 2006 but have since violated routinely. In return, Republicans would agree to an increase in the top income tax rate to as high as 49% and in addition to a new energy tax, a stock transaction tax, or value-added tax. The Indians got a better deal for selling Manhattan.
There is no transaction tax in germany. A stock order (Xetra) is 5.00 euros flat (plus about 3.50 exchange/clearing fee etc. for a 35000 euro order) when trading through flatex.de