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

Discussion in 'Taxes and Accounting' started by seasideheights, Jan 13, 2009.

  1. I'm glad you get it...maybe I don't. If I'm in error please let me know. The way I trade, if I make $500.00 on a YM scalp my tax would be $1.25. That's not a big deal. The article didn't specify where the tax is applied. Is it to profit? To the total VALUE of the underlying? Do you know?
    #51     Jan 13, 2009
  2. Applied to the "transaction", not the profit.
    #52     Jan 13, 2009
  3. Ok then. If that's the case then I'm wrong. My bad. I didn't read those particulars in the article.
    #53     Jan 13, 2009
  4. Very true.

    I don't think that you would see the Dems in NY like Chuck Schumer go for this sort of thing, and Michael Bloomberg would be kicking and screaming the whole way too. Remember, these were the guys that put pressure on Christopher Cox ( via the Treasury Department ) to temporarily suspend shorting of the banks last year. These guys wield a tremendous amount of power. You might as well also throw Hillary into that group. This would literally KILL much of the economy in Manhattan.

    Some Background on this:

    This 1/4% tax proposal was authored by none other than OREGON democratic house of representative, Peter DeFazio

    Such a tax has been discussed for years, if not decades . . . first proposed by John Maynard Keynes in 1930. It now goes by the name of the Tobin Tax, named after Nobel Prize winning economist James Tobin who proposed such a tax on international financial transactions.

    "Financial transactions taxes are in place in more than 15 countries. The U.S. had a financial transactions tax from 1914 to 1966 but then reduced it to a trivial .004 percnet tax only on stock transfers to generate revenue to support the operations of the Securities and Excahnge Commission. Recently there has been renewed interest in such a tax on international financial transactions.

    In March of 1999, a Canadian resolution calling for a Tobin tax passed in the Canadian Parliament. A similar resolution was narrowly defeated in the European Union's Parliament. Currently underway is an international initiative calling on parliamentarians around the world to enact a Tobin Tax, and a world economists call for a Tobin tax initiated in the summer 2000.

    In the U.S., a resolution supporting such a tax was introduced by Congressman Peter DeFazio (D-OR) and Senator Paul Wellstone (D-MN) in April 2000."

    Here is DeFazio's logic for introducing a Transaction Tax to help pay for the $700 billion "bail-out" of Wall Street:

    "It Must Be Paid For:

    If Democrats continue to back the basic questionable premise of the Bush/Paulson bailout, then we must pay for it. The $700 billion is to protect Wall Street investors, therefore the same Wall Street investors should pay for this infusion of taxpayer money. I have proposed a minimal securities transfer tax of ¼ of one percent. A securities transfer tax would have a negligible impact on the average investor and provide a disincentive to short-term traders. Similar tax proposals have been supported by many esteemed economists such as Larry Summers, John Maynard Keynes and Nobel prize winners Joseph Stiglitz and James Tobin.

    There is considerable precedent for this.

    The United States had a similar tax from 1914 to 1966. The Revenue Act of 1914 levied 7a 0.2% tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help finance various programs during the Great Depression. In 1987, Speaker of the House Jim Wright offered his support for a financial transaction tax. And today the UK has a modest financial transaction tax of 0.5 percent."
    #54     Jan 13, 2009

  5. Readjust your portfolio at the end of each quarter and you are paying 2% per year. Better to put your money in a CD.
    #55     Jan 13, 2009
  6. DmanX

    DmanX Guest

    It wouldn't be taxing profit. They already do that and call it an income tax.

    Allegedly, they would tax some value of the transaction - like a sales tax. Problem is, futures contracts have no intrinsic value. They have notational value.

    There is no buy and hold strategy with futures as they are wasting "assets."

    So, let's say they decided on the notational value upon which to base the tax. Take the E-mini S&P 500...

    It's notational value is $50 x the index price. So, if the index were at 1000.00, the notational value would be $50,000.

    Tax on that, per side, would be $50,000 x .0025 = $125. Or $250 round turn.
    #56     Jan 13, 2009
  7. Thanks
    #57     Jan 13, 2009
  8. TraDaToR


    Just posted in the NY times columns, do it, guys.

    This is scary.
    #58     Jan 13, 2009
  9. #60     Jan 13, 2009