imo there needs to be a sort of chain letter type thing that pulls non traders in, explaining a 2% tax for rebalancing each qtr in ira/401k when they are already taking it in the shorts , explaining why retail investors should be exluded since they are not the culprit and many other persuasive arguments with the govt contact info at the bottom, fowarded to everyone we know in hopes that some pass it on, sorry for the typing, on crackberry
Here's what I sent, feel free to use it or modify it until someone posts something better. ==== It has come to my attention that Rep. DeFazio has introduced his Transaction Tax bill to the House a few days ago. As a finance professional I beg you to read and think about the following points regarding his bill: -Many countries have tried a similar tax only to repeal it soon after. They have found dramatic decreases in volume and liquidity, increases in spreads, and therefore increased cost to the investing public. -Lack of liquidity is a large part of today's problems in today's world markets. The bailout funds are being used to buy the illiquid instruments. The Oct 1987 crash was an example of what happens when the equity markets have no liquidity. -A 0.25% tax sounds small, but to the professionals that provide liquidity it is enormous. Liquidity providers would not only decrease their volume, but many would be out of business the day the bill is enacted. Many would instead do business on international exchanges where there are manageable costs. -DeFazio expects tax revenues of over $100B per year, but that estimate is based on current volume numbers. In reality the amount collected would be a fraction of that, with a very high cost to investors and the stability of U.S. markets. Please put a stop to this dangerous bill. DeFazio has been pushing it for years with no regard to consequences or probable outcome. Thank you for you time, (your name)
I would add the real money example with correct wording suited for the letter explaining why this proposal is not economically viable. Investor who has let's say $10,000 of capital and does 1 trade every day with no leverage has to pay: $10,000 * 0.5% / 100 = $50 each day $50 * 250 trading days = $12,500 per year of transaction tax. This is greater than his investment capital and this is before capital gain taxes. This makes this proposal economically absurd. I doubt they are going to collect a penny from the short-term investors because they will simply stop transacting.
dustin- thanks for the letter. here is database of all e-mails broken down state by state. http://www.visi.com/juan/congress/ if the market is stagnant until 3:30 it will give me something to do.
Here is the letter I sent also: Dear Sir, HR 1068 IH (Let Wall Street Pay for Wall Street's Bailout Act of 2009) Legislation I feel very strongly that this legislation should not be introduced. It would seem on the face of it attractive to tax the "Wall St. Fat Cats" in terms a per-transaction tax, and recoup some of the costs of the bank bailouts. What is not being looked at, however, is the effect this will have on the small trader/investor. There are many of us who are not fat cats who make a living from the markets, and this would make it all but impossible for us to do so. (The IRS would then be deprived of the taxes on what we make also). There are also many foreign small traders and investors who are active in the US markets, adding capital and liquidity to our financial system, and they would likely then flee to other world markets who would be only too glad to have them. I estimate that trading volume on our exchanges would immediately drop somewhere between 50% and 80%, were this to be introduced, hurting both those seeking capital and those broking firms who depend on trading commissions (which are some of the same firms the government is trying to help). Please, in the name of all that is good, don't take away one of the last real competitive advantages the US has left, which is the liquidity and openness of our markets. Sincerely, XXXXX XXXXXXXXXXX
It doesn't appear as if any of the retail brokers have any comment on this. Retail brokers like tdameritrade, etrade, etc would be harmed by it. Not so sure how the big "wealth management" firms would fare though. I googled for info and didn't find anything.