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

Maybe I'm misunderstanding your point. Let me explain mine again.

1. 3617 has already passed the House. Rangel is a co-sponsor.
2. The text of 4191 specifically designates that proceeds will go towards paying for 3617.
3. 4191 is currently before the Ways and Means Committee.
4. Rangel is Chair of the Ways and Means Committee, probably the most important committee on deciding whether or not 4191 goes to a floor vote.

The conclusion is that Rangel may push for 4191 within the Committee. Obviously the reality that 4191 won't generate the funds is a different thing. But 4191 was never about reality.

 

I clearly understand your point. It still doesn't mean much. Rangel can try and push 4191 all he wants, whether it's to fund a pet project, or to shove the money up his ass. It really doesn't matter, as the Obama White House does not seem to support a transaction tax, especially with their favoring a levy/fee on the banks instead. While it is still important to fight this at every step in the process, there is no way something like H.R. 4191 would ever pass through all the necessary hoops to become law, especially in the Senate. Now if the proposed fees on the banks doesn't get the necessary Congressional approval, then I would start getting concerned, because the Obama White House would then be searching for another major source of revenue to place into his 2011 budget bill.
The preliminary IMF report due out in April will really be helpful in bitch slapping some of these transaction tax happy Democrats if they rule that a global transaction tax would not be feasible, and endorse placing levy/insurance fees on the banks instead. I don't think Congress is going to move all that fast on the tran. tax bills before them until they hear what the IMF report says in April.
While I agree that we need to keep constant pressure on our reps. in Congress, I would get too worked up on where the supposed funding would come from for H.R. 3617.

 

Lipsky newest interview:http://www.imf.org/external/pubs/ft/survey/so/2010/INT011110A.htm

"IMF Survey online: What about the idea of a Tobin tax on foreign currency transactions, or a more general financial transactions tax, which some have proposed?

Of course we will examine all worthwhile proposals. However, the original “Tobin tax” proposal—first suggested by the late Nobel laureate James Tobin—was limited to foreign exchange transactions, and was intended to reduce the volume of such transactions, not to raise revenue. While some contemporary advocates of a transaction tax view it as a means to shrink the size of the financial sector, others are looking to such a measure as a possible source of finance for development purposes. Whatever the merits of this approach, and the worthiness of the overall goal, this is not exactly the issue that the G-20 Leaders asked us to analyze. "

IMF is asking again for written opinions on financial taxes before February 1st:

http://www.imf.org/external/index.htm
http://www.imf.org/external/pubs/ft/survey/so/2010/NEW011110A.htm
http://www.imf.org/external/pubs/ft/survey/so/2010/INT011110A.htm

 

The IMF is calling for written comments. Here is a snippet from their web site. Not sure if everyone should e-mail or just those that can write somewhat intelligently (probably not myself):

------------------------------------------------------
We request that comments be submitted by February 1, 2010, to allow their consideration for the study. All contributions should be sent by February 1, 2010 to IMFConsultation@imf.org
------------------------------------------------------

 

Politico has a bunch of stuff on the new bank fee this morning:

"Administration's new fee likely to hit top 20-30 banks -- Aims to recoup up to $120 billion - One option: a fee on liabilities -- Top House Dem says idea will have 'strong resonance' on Capital Hill"

http://www.politico.com/morningmoney/

LEVY WILL REALLY RECOUP “LESS THAN $100 BILLION,” FT’s Tom Braithwaite reports: “The surcharge will aim to recoup the full cost of the Tarp bail-out fund, which the administration estimates at $120bn, although officials expect the ultimate cost will be less than $100bn. … The precise parameters of the proposed levy are still being determined, but it is expected to be risk-based and fall only on the top 20 to 30 banks. Rather than fix a precise dollar amount to be raised, the administration is likely to set an amount to be raised in each of the coming years, with a sunset clause to end the levy when the bail-out costs are recouped.”

-Guru

 

London tax could cost 9,000 jobs

By PAUL THARP

Last Updated: 2:52 AM, January 12, 2010

Posted: 2:22 AM, January 12, 2010

As many as 9,000 investment bankers in London are likely to pack up and relocate their shops out of Britain into nearby cities to evade an onerous 50 percent tax on their bonuses this year.

The threat, delivered yesterday by London Mayor Boris Johnson, capped weeks of anger in London's financial district over a one-time tax on bonuses valued at more than $40,000 -- on top of an already high 50-percent tax bracket for well-paid bankers.

It was also seen as a loud protest message from Wall Street banks to Washington lawmakers who're considering added taxes on executive bonuses here.

Most Wall Street banks, such as Goldman Sachs and JPMorgan Chase, which is led by Jamie Dimon, are also major fixtures in London.

"As Jamie Dimon says -- the UK tax is a big mistake, and it's not fair," said Chris Murphy, a partner at Goliath Partners in New York. "It's all about punishment and teaching bankers a lesson."

Murphy said that if Congress copies the UK tax, it's likely that many bankers might set up separate shops in tax havens.


http://www.nypost.com/p/news/business/london_tax_could_cost_jobs_JkLAj3t9Xq8aIM9kqEqrKK

 

Source: Obama Considering Tax on Rescued Banks

http://www.foxnews.com/politics/2010/01/12/source-obama-considering-fee-rescued-banks/

 

"President will seek modifications to the law that sent billions in bailout money in 2008 and 2009 to a flailing Wall Street that was approaching collapse, an official says."

So it sounds like they are going to have to change the TARP laws if they want to enact this tax in the next (4) years. The TARP legislation originally called for a recoupment of taxpayer money after a (5) year period.

The good news is it sounds like a transaction tax is not on the table...

-Guru

 

This piece from the FT has some good insights into the new levy against the banks:

http://www.ft.com/cms/s/0/ca43e2d4-fef1-11de-a677-00144feab49a.html

"The precise parameters of the proposed levy are still being determined, but it is expected to be risk-based and fall only on the top 20 to 30 banks. Rather than fix a precise dollar amount to be raised, the administration is likely to set an amount to be raised in each of the coming years, with a sunset clause to end the levy when the bail-out costs are recouped. President Barack Obama is likely to unveil the plan before the budget – possibly in his State of the Union address expected in the first week of February."

"The levy is seen as an alternative to ideas such as a financial transactions tax, or a supertax on bank bonuses as in the UK, which Treasury thinks are either harmful or unworkable."

-Guru

 

President Obama wants a bank levy and not a financial-transaction tax

It's looking good for us on No financial-transaction tax in the US in 2010. President Obama seems to be supporting Secretary Geithner's clearly and publicly-stated preference for a bank levy over a financial-transaction tax. Music to our ears, and just the way I figured it would be sort out.

The President makes tax changes himself each year in his annual administration-budget due out each year in February, for the year ahead. Congress then agrees to the President’s budget or not. In President Obama’s first annual budget passed in early 2009, the President allowed the two upper-income tax bracket rates to expire as scheduled in 2011, and he repealed carried interest tax breaks in 2011 too. The President followed through on his campaign promises on both these tax hikes. The Democratic-controlled Congress agreed with few to no changes. Final details on carried interest tax hikes are still not published. The House recently passed a bill to repeal carried interest tax breaks in 2010, a year early. It’s doubtful that the Senate will follow the House lead on this acceleration.

In my view, the President and Secretary Geithner have declared bank levies or a financial-transaction tax or other bank taxes the administration’s prerogative, to address in the President’s budget due out very soon (which is timely in this regard on this hot button issue). Both the President and Secretary seem to not be comfortable trusting this delicate, populist-touchy, crucial money and economic issue to the tardy sausage making process in Congress. The President has shown displeasure with Congressman DeFazio, the main proponent of a financial-transaction tax. Too many in Congress have also piled on Secretary Geithner, both weakening the Secretary and the President too. The President also learned from the health care tax debate as well as political errors made on the other side of the pond on banker and financial-transaction taxes in the UK.

This issue should be teed up well for traders. I expect the President and his team to continue disclosing the administration’s bank levy plan with politically sensitive release of more and more details as time goes by. Financial industry groups and others (like unions) will cry foul or not on various elements of the plan. A final plan will be probably be acceptable to industry and included in the President’s final budget out in February. Perhaps, some crucial details will still be lacking in the published budget, which is customary. Congress is expected to call for punishment on Wall Street and populist furor - which is greater than most people realize – should be assuaged with a significant and targeted bank levy.

After all, a financial-transaction tax falls too greatly on Main Street investors and not on Wall Street itself. As we have said all along, the bank levy approach is the right way as it’s narrowly targeted on big banks. It’s a lot easier to collect billions from 20 plus banks – who are ready, willing and able to bite this bullet - versus collecting financial-transaction taxes in small amounts from hundreds of millions of upset taxpayer/voters.

I expect that Congress will drop the financial-transaction tax from its current bills and the fringe-element sponsors of that tax will have to back off. The President is claiming this area for himself and showing great leadership in this regard. Congressman DeFazio will remain in the President’s woodshed.

I am not saying that I agree with a bank levy, considering that most banks have paid back TARP with dividends. But that is not the point here today. This populist fury is almost out of control and the President needs to swoop in to show some clear leadership and strength in the US and on a global basis. He is certainly up to the task. This bank levy is going to raise plenty of needed revenue from financial service powerhouses. The bank levy is fairer and well targeted in that regard.

What about what’s happening on the other side of the pond? I suspect that embattled UK PM Brown should back off discussion of a global financial-transaction tax after world leader President Obama puts this issue to bed, choosing a bank levy instead. Over the past few months, just having Secretary Geithner say no to PM Brown was not good enough, especially since our Secretary is on thin ice (with AIG disclosures and more). Having our President put this issue to bed in his budget also reinforces Secretary Geithner and that needs to be done too. These are the right moves all the way around and I remain very pleased with President Obama and Secretary Geithner on this front.

Next, I expect the IMF to publish its report in favor of a bank levy over a financial-transaction tax too, no later than June 2010, and probably sooner in April, if the UK elections allow for that perhaps disruptive event. Hopefully, the Tories will win the UK elections and put the financial-transaction tax to rest too. Germany is divided on the issue and only France can be counted on for a Yes vote. That’s certainly not enough. No major country will vote yes on a financial-transaction tax unless the entire world embraces it too, as they don’t want to lose all that financial transaction business.

Finally, hopefully Main Street economies around the world will recover and banks will loosen up credit. If there continues to be a “Tale of Two Cities” between Main Street and Wall Streets there will continue to be populist anger breeding grounds for bringing a financial-transaction tax back to life.

We are not out of the woods yet, but I see a clear path to victory for our cause. Keep fighting!