I want to prepare myself for the possibility of the Transaction Tax being made law. I think if we have a severe recession there will be an unprecedented assault on the free markets (which has already begun). We have had such a tax implemented after the Great Depression and it lasted for 30 years. The UK has a similar tax. So if it passes, which country to move to and trade from? I think the worse thing about leaving America is that the IRS owns u for life. I've heard that even if you renounce your citizenship u still have to pay taxes on any income earned overseas.
The transaction tax: will it be only for broker-dealer professionals, or will it also apply to daytraders who are not professionals?
Why are these threads retarded? I think there is a decent chance that the transaction tax passes, after all they've done it before and it exists in other countries. The question is how to deal with it if it happens. I think moving to another country wouldn't be necessary though, as I think only transactions on US exchanges would apply. If they want to drive my business to Australia and Singapore then so be it... nicer hours too, I can sleep all morning. It'd be a shame to lose the ES but I'd say volume and liquidity on our favorite markets would fall through the floor. Any trade that yields less than ~3 ES points is unprofitable.
The tax is only a proposal at this point, but my assumption would be that it would apply to everyone EXCEPT broker-dealers and market makers. Other entities like mutual funds, pension funds and such would probably receive similar exemptions for political reasons. The ones in the government's sights here are hedge funds and short-term trading outfits.
I don't think anyone really knows at this point. We'll know a lot more on Monday, I guess. I think it's a valid post to discuss. One possibility, obviously depending on the regulations, would be to trade foreign instruments, while living in the US (if allowed). Also, it seems like they wouldn't be able to assess that tax on Forex. Could be wrong though.
I'd head for the Caymans... if your net worth and income are under certain limits the IRS will not see your move as being to dodge taxes. The longest they can collect taxes is a few years anyhow, it's not for life... if the Caribbean gets too crazy politically or the hurricanes get to be too much or drug runners were pressuring me to launder money or whatever, I'd head to Andorra, they don't raise food with modern methods, they have skiing and their life expectancy is extraordinarily long... I'm old enough to be looking for a peaceful place with good nutrition really, I might bypass the Caribbean.....
You have to be a complete amateur trader to not see what is going on here: 1 The bubble that is bursting isn't the RE bubble but rather the 25 year long credit bubble - the largest in the history of all bubbles. A lot of US firms with good credit (Catapillar, Boeing, etc.) are bitching about having to pay a higher rate on commercial paper. They are not paying a higher rate at all unless you are comparing 2008 to 2003-2007 when risk premium went extinct. Risk premium has finally returned to the market and its going to be a painful adjustment for ALL firms. BTW the RE bubble still has a long way to deflate. There is a ton of more pain ahead and that will lead to more anger/frustration and demand that government "do something" even if that "something" ends up hurting Americans in the long run. 2 Severe economic recessions/depressions always leads to an all out assault on the free market as people prefer the "stability" of socialism. And don't think that Wall Street or Hedge Fund interests are strong enough to fight the socialist trend as they are working behind the scenes to benefit from it. Example: JPM bought BSC and WAMU for free. Bank of America may end up getting MER for free. And Citi may end up getting Wachovia for free. Big Money gets Bigger during socialist trends as the market becomes more inefficient and Smaller during capitalist trends as the market becomes more efficient and harder to profit from. If anything "they" will lobby the Government for more inefficiency/socialism so they can consolidate their power.
There is no point to complain. Let's think of alternatives. As of now I can think of focusing on options trading and possibly CFD's