Trader Tax details and Petition here. Don't pay for the bailout.

On Friday, February 13, your colleague, U.S. Congressman Peter DeFazio, introduced H.R. 1068: “Let Wall Street Pay for Wall Street's Bailout Act of 2009”, which aims to impose a 0.25% transaction tax on the “sale and purchase of financial instruments such as stock, options, and futures.” Without a doubt, many Americans are appalled at the reckless behavior of large Wall Street companies, and the notion of making those who are responsible for putting the global financial system in jeopardy help repay taxpayers for bailing them out is certainly justifiable.

Unfortunately, I feel that this proposal is the wrong way to do that, as this tax applies to all investors, the vast majority of whom have done no wrong. Effectively, this tax will punish anyone who wants to save their money, whether it be by investing in stocks or options directly, putting their hard earned money in any mutual fund, or by simply placing a portion of their paycheck in a 401K. There’s no doubt that banks and mutual funds will pass along this added cost to their customers, giving this proposed tax a much further reach than was initially imagined.

Moreover, the unintended consequences associated with H.R. 1068 are also hard to ignore.

First, many hard-working Americans make their livings by running small businesses that trade stocks, options and other financial instruments. Many of whom will be put out of business due to the fact that their margins are often quite thin. In addition, those who work for or with these individuals will also lose their jobs.

Second, a transfer tax such as this will lower capital gains dollar for dollar, making the notion that anyone who invests their money will be on the hook for the excesses of Wall Street all that more poignant.

Finally, such a tax will undoubtedly affect the number of shares traded on an absolute basis, thus reducing liquidity – a necessary ingredient in the effective pricing of assets. It’s the complete lack of liquidity, for example, which made collateralized mortgage obligations effectively worthless.

The body of the bill suggests that such a tax would have a negligible impact on the average investor. I beg to differ. For example, a $10,000 trade (or approximately 100 shares of stock in Apple, Inc.) would increase the cost of a round trip transaction by $50. 100 shares is generally considered to be a minimum size for a trade, which would devastate any small business executing even a handful of similar trades each day.

As you can see, while this bill may sound good on the surface, the effects, if it is passed, will reach anyone who wants to invest their money and will ruin many small business people who are not at fault for this distressing situation all Americans are struggling through.

I urge you to vote NO on H.R. 1068

Click on the link to petition now...
http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/

 

i did this earlier.

 

Have any of you read this petition, or do all ETers work like politicians: sign without reading.

aims to impose a 0.25% transaction tax on the “sale and purchase of financial instruments such as stock, options, and futures.”

followed by:
Effectively, this tax will punish anyone who wants to save their money, whether it be by investing in stocks or options directly, putting their hard earned money in any mutual fund, or by simply placing a portion of their paycheck in a 401K. There’s no doubt that banks and mutual funds will pass along this added cost to their customers, giving this proposed tax a much further reach than was initially imagined.

1) Saving is not investing. These terms are separate and distinct, not a fine line. An "investment" places return of capital at risk. Period. (In today's environment, the same can be said for "saving", but that is outside the spirit of this petition, and is not the topic of this thread.)

2) Where are mutual funds mentioned in the bill? Open or closed-end? Public or private? Where is 401K mentioned in the bill? Oh btw, 401K is a wrapper, not an instrument. Geez!

3) This type of tax is not a pass-along cost. For example, in most states retailers are OBLIGATED to collect and submit sales tax on each qualified purchase. It does not matter who's pocket the tax is collected from: the obligation to collect and submit remains.

Moreover, the unintended consequences associated with H.R. 1068 are also hard to ignore.

WTF. Simplistically, unintended is defined as unplanned. How is it that a slew of "unintended" consequences, good or bad, are known in advance and basis of argument?

The body of the bill suggests that such a tax would have a negligible impact on the average investor. I beg to differ. For example, a $10,000 trade (or approximately 100 shares of stock in Apple, Inc.) would increase the cost of a round trip transaction by $50. 100 shares is generally considered to be a minimum size for a trade, which would devastate any small business executing even a handful of similar trades each day.

Huh? An "average investor" does not execute a "handful" of 10K trades EACH DAY. Similarly, if executing a "handful" of 10K trades EACH DAY can "devastate any small business", than that "small business" has no legs anyway.

In no way am I against standing up for what you believe: Revolution Ranger Rick For Congress!! But this petition is not worthy. Signing this petition is like using a mirror to see around a corner: Politicians will see something and the something is not a credible threat.

Once unthinkable, now unstoppable
obama-lama

 

Why did this get moved to chitchat?

 

I read it and I totally agree with it.