I need to read the actual legislation but I've been all for a Tobin tax, or transaction tax.

You might mention to Mr. Hirsch that he just needs to create an account, that we're not like other sites where there is only one account or requires special something....the architecture here is one of a community blog, so he could have his name on the piece as it goes out into the wild world of RSS feeds.

But great post and love DeFazio, now I just have to parse the actual bill.

We also need this on a global scale, else trades will happen on other exchanges not subject to the tax.

It seems the government is moving in the exact opposite direction.

The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.

The actual value of this exemption could be zero (if Citi makes no profits) or up to 40%, roughly $15 Billion.

The IRS, an arm of the Treasury Department, has changed a number of rules during the financial crisis to reduce the tax burden on financial firms. The rule changed Friday also was altered last fall by the Bush administration to encourage mergers, letting Wells Fargo cut billions of dollars from its tax bill by buying the ailing Wachovia.
"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," said Robert Willens, an expert on tax accounting who runs a firm of the same name. "I've been doing taxes for almost 40 years, and I've never seen anything like this, where the IRS and Treasury acted unilaterally on so many fronts."

I will be blunt, I'm against this. First it would put me out of business, as I day trade to put food on the table and pay my bills. Secondly, this bill will not do what you think it will. Thirdly, despite DeFazio and Harken and your 21 congressional supporters, this bill will never get anywhere and thank god for that.

Do you really believe you will get the money to fund a jobs program with this? The moment you enact this, at best you will get one year's worth and even there it won't reach into the 100 billion mark. You will kill liquidity in the markets, and while you may not think you're affected because you don't actively trade stocks, you will get hit. How? Index and other funds. Each day they need to adjust their holdings to match performance to a key benchmark. You think they will eat up that cost? Never, they'll simply pass it on to you, and at best you will see a lower return on your money.

Then there's liquidity, though you may hate people like me, the fact is if you needed to get out of a position, we're here to do it. Instead, what will happen, you will see spreads widen, and volatility increase. You didn't care for the wild swings in Sept-Oct of '08? Well guess what, that may become norm.

You don't think there won't be exemptions? In the UK and other European nations there were. But for those not given such a privileged, they moved their money to either new instruments that were exempt or to other countries. And trust me, the moment this is passed, every big institutional player like Goldman or Merril will find a loop hole.

I know a lot of you think "speculation" is evil or useless, but it isn't. You will tell me that I should hold long term, but let me tell you that my risks are better when I close out. Buy-and-hold doesn't work, unless you can nail a good deal and buy like Warren Buffet size blocks. All those investors in Enron or At&T or GM or Fanny Mae, who held on for years got burnt. Me? Yeah I may make nickels and dimes and dollars here or there, but a I can sleep at night knowing I'm out of anything that would hurt me financially. Why is that so wrong to people like you?

Lastly, the blame, it wasn't the stock traders or the futures traders that did this. It was the real estate folks and the derivatives tied to that. I know I know, it's "Wall Street," well that's like me bashing all the unions because of some corrupt Teamsters in Chicago or something. If you want to say it's connected, then tell me where I caused someone to lose their house?

Ag groups call financial tax counterproductive

 

Spokeswoman says action 'would put jobs at risk'

By Wes Sander
Capital Press

Commodity groups oppose a tax on trading financial instruments proposed by Rep. Peter DeFazio, D-Ore.

The bill -- HR 4191, the "Let Wall Street Pay for the Restoration of Main Street Act" -- was introduced in the U.S. House of Representatives on Thursday, Dec. 3. Sen. Tom Harkin, D-Iowa, was expected to introduce matching legislation this week.

DeFazio calls it a "minuscule" tax, amounting to 0.25 percent of stock transactions and 0.02 percent of the sale of futures contracts.

Farmers and ranchers use futures contracts as a hedge against price fluctuations, as do elevators that buy and sell grain.

Bethany Shively, spokeswoman for the National Cattlemen's Beef Association, said such a tax would impact a producer's effort to stay in business by buying and selling futures.

"Any additional taxes or fees on these instruments would be a tax on ag producers, and that is unacceptable," Shively said. "This type of proposal would put jobs at risk, not help offset their creation."

DeFazio said the tax could raise $150 billion annually. Half of that will fund job-creation programs and half will go directly to reducing the federal deficit, he said.

DeFazio said the measure skirts the middle class by exempting retirement, education- and health-savings accounts from the tax, and $100,000 in taxable transactions would be exempted annually.

Daren Coppock, CEO of the National Association of Wheat Growers, said the tax would only degrade the markets that commodity growers rely on to help moderate exposure to market swings.

"Adding a tax on financial instruments and futures contracts would be counterproductive to the goal of helping those markets recover or function more efficiently," Coppock said.

 LINK: Ag groups call financial tax counterproductive

H.R. 4191: Let Wall Street Pay for the Restoration of Main Street Act of 2009 .

Exemptions:

1) tax-favored retirement accounts,
2) education savings accounts,
3) health savings accounts,
4) mutual funds and,
5) the first $100,000 of transactions annually that are not already exempted.

Taxes:

stocks - 0.25%
futures, swaps - 0.02%
options (unclear) but looks like underlying asset (stocks) at 0.25%

So, if I buy $200k of GLD, that means a transaction tax of $50 bucks on top of the trade fee.

I think DeFazio's bill needs some work, such as first 100 transactions are exempt additionally. But still $50 bucks for a sale of $200k isn't that much really. Not too long ago brokers were collecting way more than that per trade.

According to New Deal democrat initial jobless claims in November at 480,000 implies that “actual job growth is taking place in the economy this month.” This proposition gives new meaning to “Orwellian.”

This is not to criticize his analysis, which is consistent with other economist. Rather, to indicate what a ridicules discipline Economics is. The English language has no meaning in the mouth of economist.

Yes! Yes! I know. “Different Surveys!”
(What’s up is down and what’s down is up”, said “The Red Queen” in Alice’s Wonderland).