If the purpose is to tax the rich, then transaction tax on stocks is a bad idea. Stocks are public investment for everyone, including the middle class and poor. Transaction tax will hit the middle class and poor as well. If want to tax the rich, then tax income and high-end property. Not common stocks.
Get a grip man. I think an FTT is a horrible idea. But I know that 99.9% of the middle class and poor make fewer than a dozen stock trades a year. The FTTs that are being discussed would impact them to the tune of at most a few cents per year. There are good reasons to be against an FTT, but this isn't one of them. Making stupid arguments designed to purely emotional appeal weaken ones position, which presumably is the opposite of what you're trying to accomplish.
Financial Transaction Tax(FTT) is very popular in a couple of Latin American countries such as Brazil and Colombia. It is a very efficient tax to collect and easy to sell to the masses. In those countries, checks, and money transfers are charged, but financial instruments cleared through exchanges are exempt. The tax incentivizes cash, but I would suspect that in today's digital world, we would see a surge in the VENMOs of the world. Different story if they just want to tax pure speculative transactions a la Tobin tax.
It only works if every jurisdiction where trading takes place implements it at the same level at the same time. Otherwise everyone just shifts their trading to another jurisdiction or you have to enact somewhat draconian and hard/expensive to enforce laws to stop the movement. And some jurisdiction will always defect, the benefits of having almost all the world's trading are just too great to resist. Second order effects depend on how it's implemented. If the laws poorly written it hurts liquidity which is bad for all market participants. If it's well written it mainly hits ultra HFTs. That leads to that niche just going away, which is great if that's your policy goal, but not great if you planned on getting a lot of revenue out of the FTT.
%% True; but not likely it would ever pass. Good thing big banks /insurance companies love to invest big bucks for lobbyists + lawyers/CPAs..............................................................
Institutions generally support it as they see it to be the end of HFT and more liquidity returning to lit markets.
What does liquidity provision look like in that scenario? Just natural buyers and sellers posting orders? Or do we go back to 1/4 and 1/2 wide markets to so there’s something leftover post-tax for market makers? Or outright exemptions? Just curious if you’ve heard any speculation...
Well with Democrats winning in Georgia, an FTT definitely has higher odds of becoming reality unfortunately.