A Wall Street Transaction Tax

There seems to be momentum on the hill to push for a small transaction tax on stocks. The proposal puts a 0.1% transaction fee on every order by total cost.

Consider this a sales tax, although instead of regressive, this puppy is progressive as well as more biased towards institutional large investors. (Hey flat taxers, by philosophy you should love this one!)

Because it is based on transactions, each time a security is bought and sold, those fees will add up on those who make large trades the most frequently. In other words, such a tax would target large hedge funds and institutions making profits off of slight fluctuations, such as those engaged in high frequency trading and derivatives.

In the Hill's article, AFL-CIO, Dems push new Wall Street tax, AFL-CIO policy director Thea Lee is quoted:

The big disadvantage of most taxes is that they discourage some really productive activity. This would discourage numerous financial transactions. People flip their assets several times in an hour or a day. They make money but does it really add to the productive base of the United States?

Oops, no more day tradin' fer you! Get out there and make somethin' you lousy Wall Street bum!

All kidding aside, the AFL-CIO wants the money to go to infrastructure projects. Now is that really the right allocation of such revenues, long term? Assuredly some real long term investments for the real economy are sorely needed, all E-Trade commercials aside.

This tax is estimated to generate between $50 to $100 billion a year....but we know the IRS. Once they get that revenue stream, is it possible to encourage more high frequency trades, simply to generate more tax revenues? Kind of like taxing smokers, or say property taxes....you might find yourself hoping more cigarettes are sold or home prices go up, just to continue to fill the coffers.

How about a transaction fee based on a time based frequency scale? 10 trades in an hour, 0.1%, 1000 trades in an hour on one stock, 10%....or even make some mathematical models to predict the probability of proprietary routing software or even speculation and tax accordingly! Now this will put a lot of computer programmers to work, figuring out the real profit margin, all the while dealing with a frequency based tax scale at least.

See, I can make up busy work for profit too!

Where is this stuff coming from? The Hill mentions the Tobin tax, which is a concept to deter currency speculation.

Representative Peter Defazio(D-OR-4th) wants to apply the same principle to oil speculation (remember that before the financial crisis?)

This idea of a transaction tax was proposed as an alternative bail out plan, which of course was dismissed since Congress was getting railroaded by Paulson and Bernanke.

DeFazio has introduced a bill, with 29 co-sponsors, to curtail oil speculation, again with transactional taxes. The Bill is H.R.3379, Title: To amend the Internal Revenue Code of 1986 to impose a tax on transactions in oil futures and options and to deposit the revenues from the tax into the Highway Trust Fund.

The bill puts a 0.2% transaction fee on oil futures and a 0.5% transaction fee on oil futures options.

The U.K. is already considering a transaction tax but notes that traders will simply move transactions offshore to avoid it.

The Curious Capitalist blog has a little background on transactional taxes. The most interesting thing is Sweden tried it and the result was it did push transactions abroad.

Myself, I'd like to try it, say in one area, such as DeFazio's oil speculation, an obvious market that affects the entire U.S. national interest and the economy as a whole. Would it work?

Could one try to get such disincentives adopted by the rest of the globe? Isn't this a general problem? The minute one nation attempts to encourage good economic behavior....the risk is that very business entity simply moves somewhere else. Ah, the race to the bottom for nation-states and multinational corporations run amok, playing one country off of the other ones.

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Comments

why do you say flat tax?

are you saying this is a national sales tax on stock trades?

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"flat" = one rate

It is "flat" because it is the same rate (0.1%) regardless of the amount, whereas a "progressive" tax would have higher rates for larger trades.

miasmo.com

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flat also refers to a national sales tax

which is why I poked fun at the flat taxers...
they will argue all day long for that, claiming it will capture an underground economy, but hit the hedge funds, the major speculators, they will have a hissy fit! i.e. sure it's fine to regressive tax the middle class poor, but them? No way!

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Economics is an important subject to actually understand

The author of this post does not understand how financial market work. A 1% tax on transactions wouldn't raise much revenue, it would simply eliminate nearly all financial transactions. Stocks, bonds, and futures trading would halt. Mortgage issuance, and therefore mortgage loans, would halt. Short term debt issuance would be impossible. Companies would no longer have access to capital. There would be a massive, massive cash crunch and massive bankruptcies.

A smaller tax, such as the proposed .25% tax, would probably eliminate 95-99% of all trading activity. Once again, the absurd revenue estimates based on current transactions levels would have to be reduce by a factor of 100.

Even the .01% tax would have a big impact. Look at financial markets. The spreads are incredibly small. This is a good thing. It promotes the efficient allocation of capital which in turn increases liquidity and access to capital. Companies need capital. The last thing any civilization should do is to act to impede it's inhabitants ability to transfer capital from unproductive enterprises to productive ones.

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We are looking at financial markets

Derivatives trading, hedge funds manipulating entire commodities futures....

I'm finding these claims so odious. I do not see such a campaign against broker transaction fees. They are much more than this tax will ever be.

Why not blast broker commissions claiming those are all "too high" and will "shut down markets".

Unfettered manipulation of markets causing destabilization and bubbles in nationally critical commodities is a very important topic to understand!

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Well said Robert.

Neo-liberal BS will, unfortunately, die hard. Sometimes I even dream that it were so.

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JV is completely up in arms over the idea

So, I wouldn't just labeled this completely neo-liberal BS...

I do believe it needs to be a. global b. finely tuned

We want GS to pay their share and esp. hedge funds, which currently enjoy a glorified 15% tax on their income, but also stop wild speculation which can create commodity futures bubbles and wreck havoc with the economy. We also want to get those derivatives.

But nailing daytraders who are pulling in personally say $500k or less and other individuals we sure don't.

But I am kind of sick of this focus on the markets instead of looking to invest in the "real economy"...ya know like say a VC fund or Angel investor fund to take those "big return" gambles, but they take a good 5 yrs to pop out.

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God I hate this idea

For starters, speaking as one of those day traders you seem to hold such contempt for, this would put me out of business. So if you're pushing for this, then you're pushing to put me out of work. Secondly, it wasn't the average day trader that caused this mess. If you want blame, start with FASB 157 and folks like Lehman. Speaking of which, do you really believe that this tax is flat and "progressive" (I'm really starting to hate that word) when the ones who really would be affected won't be the rich.

In the UK, where they have this, there are exclusions. Oh yes, and it would be here as well. The very people who you think would pay this, Goldman and Morgan not to mention the very largest of largest market makers would probably push and get excluded, because Congressmen who are from places with major financial districts (i.e. Schumer, etc) won't screw them.

But lets look at it from a different angle. Say this passes, and no one is excluded. Do you know what his would be like? Well I hope you like volatility, and I mean a lot of it. Why? Because market makers and day traders will have to move stocks into even wider bid/ask spreads to make up that difference. Say you need to get out of a stock at a certain price? Good luck, even with a limit order fullfilling that even with a fill-or-kill order.

And yes, you will see a lot of this move outside the country. Some may applaud, until you realize that derivative instruments are trading outside US jurisdiction ,based on US assets, start causing waves over here. Only now you won't be able to touch those traders.

So go ahead, pass this insane law and get comfortable with 7%+ moves where the average investor will have a hard time getting a good price as he or she tries to wiggle out of their 100 shares. Watch how all those "banksters" move offshore, and many will denounce their citizenship to escape taxes, and still make mint moving American equities. Watch as companies increase their cross market listings, goaded by investment bankers, into markets that won't be touched by this tax. As for me, well I still love this country, and if this passes, I will have no choice but to support whomever can defeat the people that put this in place.

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moving American equities

Watch how all those "banksters" move offshore, and many will denounce their citizenship to escape taxes, and still make mint moving American equities.

How would they escape a transaction tax by moving offshore? U.S. equities are still listed on US stock markets right? [I am not familiar with foreign stock markets so I concede that I may be confused on this point.]

miasmo.com

 

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they can move trading groups

offshore and also, for example, oil futures are traded around the globe, so they could go to another country to do their trades.

I'm not sure if other exchanges trade all U.S. equities, or some or not, I know they can have foreign subsidies etc. traded on other exchanges...like SNE, you can buy that here but is it SNE corporate, i.e. a Japanese stock or is that the FCDC only stock. I'm pretty sure it's the entire Sony corporation when trading it here.

Kind of like corporations moving their headquarters to the Cayman Islands, even though they get U.S. contracts and basically operate in the U.S.

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actually

In the late 90s through early 2000s (or is it 00s?), there was actually a race of sorts between the major US and British and EU and Singapore exchanges over listings. When Sarbaines Oxley passed, the LSE's Alternative Investment Market (AIM) made some headway, same with Euronext. And really, as far as I can tell, there is no rule that says you MUST float your shares on a US-based bourse.

Many foreign exchanges do offer things that one cannot trade or do here in the US. Mainly this is due to regulations. For example, there are specific commodity ETFs that probably won't see the light of day here. Another example are single-stock futures, yes they started trading here, but they are nothing like their European or Asian counterparts (ironically enough the largest open interest are in futures on US stocks). And at times, American exchanges were not the largest, for a few years the Kofex or Korean Futures Exchange (now just called the Korean Exchange) main derivatives (i.e. futures and options) on the KOSPI (their "Dow") had more contracts traded than say the S&P pits on the Merc.

IBM could as easily be traded, if not HQ'd, in Europe as it could in Asia or even Toronto. Same with Microsoft, or Goldman Sachs. Remember, with stocks, its just paper, it doesn't matter. Secondly, most exchanges are electronic, so you really wouldn't notice much.

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addendum

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thanks JV

I knew you'd know the ins and outs of getting around a potential transaction tax.

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volatility minimized by day traders?

Well I hope you like volatility, and I mean a lot of it. Why? Because market makers and day traders will have to move stocks into even wider bid/ask spreads to make up that difference. Say you need to get out of a stock at a certain price? Good luck, even with a limit order fullfilling that even with a fill-or-kill order

Not sure I get this. I never heard of "day traders" until the 90's. I remember my dad doing a lot of stock market investing back in the 70's and I don't remember any crazy volatility that went away when day trading became a big thing. What am I missing here?

As for stock trading moving overseas where we have no control but it still affects our economy, that is a worrisome prospect indeed. (Thanks for your answer to my previous question on that.) Perhaps a return to some Bretton Woods type deal that restricts international capital flow is in order.

What would you think of a transaction tax in a hypothetical world where stock trading moving overseas is out of the picture? Would you be more amenable to it if it only applies to trades larger than a certain size or if it is a smaller rate, say 0.01% rather than 0.1%?

Aside from a transaction tax, I would like to see capital gains taxed progressively like income tax is. Why don't we do that? As Warren Buffet likes to point out, he pays lower tax rates than his secretary.

miasmo.com

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The answer to trading moving overseas

Is simple- just enact a federal 25% sales tax on wire transfers.

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how do you discriminate?

between a wire transfer between a parent sending cash and a day trader? I mean, other than the amount. Still, even there, say you set a limit as a trigger, how do you know it is for funding speculation? Secondly, banks don't have to wire anything to move money, they just press a button on their keyboard and zap...a branch in Luxembourg can see the money.

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I can't get into this too far without breaking rules

"between a wire transfer between a parent sending cash and a day trader?"

I would assume that a parent would open a joint account in a bank that has branches in both cities to avoid doing wire transfers to begin with. Other big plus means that the parent can monitor the college kid's account and help avoid overdraft fees.

"Still, even there, say you set a limit as a trigger, how do you know it is for funding speculation? Secondly, banks don't have to wire anything to move money, they just press a button on their keyboard and zap...a branch in Luxembourg can see the money."

I would assume that any given *TRADE* would involve moving money between account numbers of the traders involved.

Of course, this would also have a tendency to put a damper on exports and imports- but that's just a bonus.
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The average person

Should be producing something, not gambling in the stock market to begin with. So yes, I do believe the intent of this is to remove people from day trading jobs and place them back into the factories.
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Producing something?

Sorry, but our factories have gone to Mexico and we are left with only this casino.
Frank T.

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Frank T.

See my comment in the Sunday Funnies

The buildings are still here, aren't they? Perhaps instead of day trading, the day trader could invest his funds in re-opening the factory.

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right..?

..but they won't let us open the factories, they ship them overseas!

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To which I say...what factories???

Wage arbitrage and globalization sent a good chunk of those jobs overseas under the guise of "free" trade. Look, seebert, speculation will go on whether it's the stock market, or folks peddling rice; there is a long history of it all over the world. As for "gambling", yes there is that, sadly. But let me tell you what a mentor said to me, and this guy was an old timer on the CBOE and CBOT and a good liberal, who said "gambling is creating risk, trading is assuming risk." Now you may ask, what the heck is the difference? Well, in the former you don't know all the variables and odds are it will blow up in your face, the latter you know (for the most part) most of the variables and one can hedge or even back out.

For example, say we have a casino and a commodities exchange (yes, I know, "Oh gee, ain't they just two of the same thing?" Yes, but the exchange has less cocaine in it's premisis...booyah..drum roll please! Yes, you can catch the rest of my act at the Green Room...try the veal!), anyways, you have these two places. Now you walk into the casino and lets say you want to play the slots, since those are the most used casino vehicles. For arguments sake, say you picked those machines that require $100 coins and you plunk in 10 coins for ten swipes of the one-armed bandit.

At each incident, there is a chance you could win the big prize (lets say $1 million bucks). Now I don't have my math with me here, but I believe you got 1-in-10 chances given the coins you've put in. Obviously, the odds are much more crazier, because you have to take into account all the possible combinations, especially if this is a progressive slot machine. Chances are, you will not win that million bucks after that last of 10 coins is used up. You have risked 100% and your reward is bupkis.

Now let us say you walked into the commodities exchange, a dubious place, I grant you. You decided, for $1000, I will trade corn. Now you put down your $1000 margin (I've simplified it here, but the margin for corn is about 50% more), which is a down payment to control 1 contract. Corn is considered a "beginners" future contract, though you can still get wiped out. Each contract (also known as a "car" or "lot") represents 5000 bushels, and is priced per bushel, which at the going rate $3.190 or $15,950. Each $.0025 move = $12.50, or $50/per each penny. So here you own this one futures contract, now one of three things can happen. A)Corn goes up, you make money. B)Corn does nothing, you make nothing. C)Corn goes down, you lose money. The only question is, by how much for the first and last possibilities?

This is where the guys who last differ. You can set a limit prices, say if corn drops 2 cents, you want out. Corn is pretty liquid, LOTS of speculators who will buy that lot from you easily under normal market conditions. "Wait...normal market conditions?" Like I said, this is where the guys who last differ. In order to trade, really no matter what methodology you use, you need to have risk management and that means knowing your product and knowing when to get out (note I didn't say get in). That's the key. If you study that "beginners" future, you will notice that in the Summer months, between July and early September, it can get crazy and go up up up because of fears of future crop. Folks who have survived and been around, study seasonal cycles. So say you did this and you bought corn thinking it will make a Summer rally.

But lets say it doesn't rally to the point you wanted or even it starts going down because a Dept. of Ag. report says we should expect a bumper crop. Well there are three things you can do here, one if you moved up that exit limit you can potentially lock in a gain, two you can just try and exit and terminate that limit order, or lastly purchase a Put option. Yes, one of those vile and evil derivatives, a Put option gives you the right-but-not the obligation to sell something at a specific price within a certain time. Using today's data, and say you purchased that Put when you bought that Corn lot, you paid $.125 for that "At-the-Money" 320 Put, or $625. So, until December, if Corn should drop, you're protected, this is a basic form of hedging. If it goes up, you win. If it does nothing, you're only out what you paid for the Put, unless you sold that back. Given that corn tends to move at least 10%, you could make 30-50 cents or $1500. If it drops (corn really never stays still), say from $3.19 to $3, that Put appreciates and you sell it back and hopefully make the difference (either way you won't lose 100% like you would have at the casino).

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An alternative to day trading

Wage arbitrage and globalization sent a good chunk of those jobs overseas under the guise of "free" trade."

Yes they have- but what if we took the money *wasted* in day trading to actually open those factories back up, to form co-ops that compete locally with foreign goods? What if we actually, gasp, lobbied our local governments to create sales taxes on shipping, so that our local goods could compete better?

And wouldn't that be better than say, playing the odds that your corn futures will come out right, especially given the fact that you have NO ability to know that the piece of paper you've been handed actually is a corn future and not just a piece of paper created to look like one?

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without the daytrading

without the daytrading money, we cannot open up the factories...but yes, you say, daytraders lose money, so instead of losing it, they should plow it into those factories...but the daytraders who make money are the ones who stay in the game, those who lose money are gone...therefore true daytraders make money from the market, which you want to use to open factories, but if there were no more daytraders, there'd be no money for you to open those factories in the first place! I will trade, but I will not open up a factory because the risk in trading is waaaaay less than opening up a factory, trust me!

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You can't make money from the market

Because money is a measure of wealth, and wealth is production of tangibles.

You can only move money around in the market.

Only by opening a factory can you actually *create wealth*.
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this is a ridiculous statement

once again Seebert, please get back into economic reality and quit posting your ill conceived beliefs on what you think markets are about. Wealth is not even defined by economic terms and can imply various measures, including money or PPP.

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Assumptions

once again Seebert, please get back into economic reality and quit posting your ill conceived beliefs on what you think markets are about. Wealth is not even defined by economic terms and can imply various measures, including money or PPP.

If wealth isn't defined by economic terms, then why did Adam Smith call his book "The Wealth of Nations"?

Wealth is well defined in that book as the value added to natural resources by work to turn them into tangible products, or to put it in a direct quote, "the annual produce of the land and labour of the society". I am using that definition.

Adam Smith saw wealth creation as the combination of materials, labour, land, and technology in such a way as to capture a profit (excess above the cost of production). The theories of David Ricardo, John Locke, John Stuart Mill, in the 18th century and 19th century built on these views of wealth that we now call classical economics.

Do you disagree with that basic *economic* definition from the granddaddy of all economics textbooks? And what textbook are YOU using that defines wealth as "various measures including money or PPP"?
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Adam Smith incorrect

Smith measured these elements by money, i.e. the markets are an indirect reflection of wealth by his definition.

Thinking there is a limited amount of money in some market pool and it's just traded, never to disappear or reappear is conceptually incorrect.

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Only because the FED forces it to be so

Thinking there is a limited amount of money in some market pool and it's just traded, never to disappear or reappear is conceptually incorrect.

Response deleted due to lack of knowledge of other forms of economics.
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Putting it another way

" I will trade, but I will not open up a factory because the risk in trading is waaaaay less than opening up a factory, trust me!"

If you open a factory, produce goods, and refuse to sell those goods other than at a profit, you still have the material wealth of the goods. Even outdated goods have value on the collector's market eventually.

If you buy shares, and refuse to sell those shares other than at a profit, and the share price goes to 0 all you have is useless paper.

In what way is the risk of trading less than the risk of manufacturing? Under trading, you could potentially lose everything, under manufacturing (assuming you did so without turning to credit and investors, which is just trading once again) you have the produce you manufactured.

Or are you too going to claim Adam Smith was an idiot?
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2nd reply

Who is stupid enough to *sell* a PUT option at only $.125, if corn moves at least 10%? If the put appreciates, the guy selling the put has lost money- he should have charged at least $.319 for it, so that he doesn't lose money on a 10% change.

Derivatives sellers are either real idiots, or just plain stupid, and I'm not sure which.

That's why we need to do away with commodities and stocks altogether- people should make money by actually adding wealth, not moving paper around.

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Oh Seebert... :)

You, sir, put a smile on my face. You give me an opportunity to teach. Here, let me explain something, that seller knows about the potential 10% move. That seller is either one of two folks, A) a Market Maker or B) another Speculator/Hedger.

In the case of a Market Maker, he is obligated to match your trade if you offer it, otherwise if there are any shenanigans the nice folks at the Commodities Futures Trading Commission (CFTC) will pay a visit. Yes, he sold you that Put, but he also offsets it by either buying another one OR selling a contract as well. These guys buy and sell, their "book" is full of orders, they will be out of that trade in a jiffy.

Now if another speculator or commercial (another name for a hedger) sold you that option, they would have their own reasons. The speculator will have sold you that Put hoping Corn goes up, thus the option will lose value. Actually let me backtrack for just a moment, and talk about premium. Premium is the price of the option, in this case that $.125 or $625. One of three things can happen, either Corn goes up (and the option loses value), Corn does nothing (and the option loses value because of time decay) or Corn goes down (where he loses money). Options are time-sensitive instruments besides being price sensative, the longer until expiration the more you will pay. You would pay more for an option that expires one year from today than you would for one that does in 30 days, because you have more time to be right.

To do all this , the seller also must post a margin with her/his broker. But lets say that Corn collapses and this option seller is sweating bullets. Well there is a thing called Margin Maintenance. You see in futures, unlike stocks, when something rises or falls, cash is being deposited or withdrawn from your account, all of which is against that margin you put up.

So if Corn rose at the close, say a penny, $50 would be deposited into your account at mark-to-market. Vice versa for the opposite, now remember in our simplified example, you had to put down $1000. Often Maintenance will be less than this, say $700. So as Corn drops and your losses exceed Maintenance, you will get a call from your broker to pony up the difference. If you can't, they liquidate your trade. The speculator is hoping for that option to either expire worthless and pocket that premium OR to buy it back at a much cheaper price.

The Hedger is in a different boat. Commercials most of the time are folks who actually deal in the product underlying the futures contract. Margin for them is different. They cant really speculate. Thus a sale is to offset risk.

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Sounds like just more shuffling of paper to me

So when do the tangibles that back up this wealth actually get produced? Or is it just another con job like the credit market, the FED, and Reserve Banking, where they create money without backing it with any wealth whatsoever?

In other words, who is stupid enough to buy orders from the Market Maker? I certainly wouldn't- snake oil salesmen, the lot of them, creating a market just because they have no talent at producing tangible wealth.

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In an ideal world

Futures and derivatives are designed to promote production by shifting risk from those who don't want it to those who do. If I am a farmer and can produce a car of corn for $2k, and a contract for a car of corn is selling for $3k, then I can get a contract and begin production with the certainty that if things go as planned I will make $1k profit. There is still risk. If it costs me more than $3k to make that car of corn then I lose money. But I have some measure of control over that. If, however, someone dumps boatloads of nearly free foreign corn on the market between when I begin production and when I harvest (thus making my product worthless) I'm still in the clear because I have a contract. OTOH, if a drought kills everyone else's corn but mine and I could sell my car of corn for a bazillion dollars it's tough cookies for me. I have a contract. The owner of that contract has assumed the risk that future events will change the value of the product so that I can concentrate on actually creating that product. The same can be said of derivatives. If I own a contract, but am uncomfortable with the amount of risk I have assumed, then I can give that risk to someone else that is more comfortable with it.

This is about as far as my amateur grasp of futures and derivatives goes. If I've misunderstood something please correct me, but futures and derivatives make production far less risky for the manufacturer. The problem is when bets are accepted as "Risk Free" by a vast number of people. A positive feedback loop begins, a bubble inflates, more weight is put on the betting system, and when the bubble pops it takes everyone with it. Commercial Real Estate would be the most recent and obvious example. Ideally, strong regulation prevents such a problem from getting quite so out of hand. A good start would be keeping anyone (including banks and insurance companies) from gambling with money they do not actually have, and not allowing them to use existing bets as "assets" for the satisfaction of that requirement.

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The Day trader speaks!

I'm poking fun, firstly the idea is to target GS, those high frequency trades.

Secondly, I was thinking for oil futures speculation maybe this is something to try.

One could also maybe scale such a thing to PI, say the tax only goes in when profits from trades is > $500k or something.

The day traders comment is my interpretation from the AFL-CIO messaging. Don't worry, we still love ya JV!

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Waaaaah. Remember folks,

Waaaaah. Remember folks, taxes are a way of society paying for what it wants (what it wants is determined by US Government, our elected government).

If trading is taxed, will Wall Street collapse? No. Like everything else in nature, when pushed on by a force adaptations are found. This is not the end of the world. Wall Street does not trade on data anyway, but impressions.

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Wow...just wow

Remember folks, taxes are a way of society paying for what it wants (what it wants is determined by US Government, our elected government).

 

That's going to come to a surprise to the rest of US who didn't want those damned free trade agreements or their corresponding organizations.  The last time I checked, what anyone really wanted wasn't determined by some bureaucrat in Washington, but by the voters.  I'm pretty sure most on this board didn't want a war in Iraq, yet the US Government, our elected government, did start just a conflict.  Not sure who you really are, wish you didn't do this anonymously, but you're seriously wrong if you think this government or really any in the past 20 years really has represented those who sheepishly elected these politicians.  

 

There is this modern fallacy that our government works for us.  That this thing called "democracy" in our republic still works.  Oh it works, for the few months when the gang in the 'Beltway' come back down from their ivory palaces and try and get folks that they're one of us.  Its all a dog and pony show now.  

 

What we have now isn't a government, or I should say that government now really is a giant corporation with mandatory membership dues that says we're all shareholders...only thing is we the average person aren't even getting A shares.  Yes, taxes pay for things, and often it goes from your pockets to that of those who will fill these politicians' retirement funds.  You also claim that it pays for what society wants.  I've got news for you, society wants a lot of things, and many times they're petty perochial things or simply wanting to be bribed.  There's a famous quote often connected to Alexis de Tocqueville (but really isn't) that says it best:

The American Republic will endure, until politicians realize they can bribe the people with their own money.

 

 

 

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Lord Turner, chairman of UK's Financial Services Authority,

talked about the Tobin tax in the context of having financial institutions and financial sector that was too big. Now, those who absolutely dread the Tobin tax are saying we should have "macro-prudential" policies that monitor the entire system for risk and make capital requirements of individual banks a function of their size.

I say bullshit. Any new capital requirements will have loopholes or the financial conglomerates will find ways around the capital requirements.

The solution: BREAK THEM UP! Either through anti-trust laws or the re-establishment of some form of Glass-Steagall. This would require upsetting the financial oligarchy.

RebelCapitalist.com - Financial Information for the Rest of Us.

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My good man

regarding breaking up these banking behemoths, you just may be on to something! Glass-Steagall, for the most part, meant stability. When they broke that wall, they let the barbarians in.

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Lots of things to do

I think Tobin Tax is a good idea. Has to be international. Rate can be very small.

But beyond that, many other things would be good. Bring back Glass-Stiegel. Abolish credit derivatives or at least put them on exchanges. Regulate compensation in finance, mandate 10 year clawback on bonuses. National usury law. Increase capital requirement based on size of banking institution, and keep increasing it until we have much smaller banks. Small banking is good, big banking dangerous to everyone.

Return to the kind of restricted international capital flows the world had under Bretton Woods. End all agreements to the contrary such as NAFTA, CAFTA, and GATT. Abolish IMF and World Bank. Cancel all international loans to poor countries by attaching them to the crooked leaders who made them instead. Make international agreements instead to enforce the most rigorous environmental and labor standards around, including EFCA.

International carbon tax, with proceeds divided among every living adult human in the world equally.

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Welcome to EP Charles

Some of these are politically impossible I believe, but this tax, if it was just on a commodity so strongly linked to the overall economy, the national interest, it's worth trying something like this, but I agree, this must be international, although it's clear some nations are considering it.

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Transaction tax on Securities

a Transaction tax on Security tranactions is a dumb idea.
since it will discourage people from taking risks while the govt benefits from people taking the risk in trading a stock.
Keep it the way it is or raise the Capital gains tax, a tax based fairly on earnings not just transactions.
Mainly its those nutty Californians who are behind this regressive legislation and look where California is behind the eight ball.

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it would be useful for people to understand what the point is

Firstly, this is to stop high frequency traders, hedge funds, speculators. Capital gains cannot really do that, not unless capital gains based on frequency is changed plus the rules for institutional investment houses is changed to be the corporate tax rate instead of capital gains.

This legislation is very obviously not regressive as mentioned. Poor people are not engaging in high frequency trading!

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This is the stupidest tax ever

Day traders who have 100k in their account end up trading over 60 million dollars of shares and hardly make any profits...and on top of that pay another 150k . Are you kidding me..

May those who vote for this tax or even encourage it never ever prosper...

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