Eliot Spitzer: Tax the Traders! It Would Solve Economic Crisis and Stop Reckless Activity

[marmar]

Slate / By Eliot Spitzer

Eliot Spitzer: Tax the Traders! It Would Solve Economic Crisis and Stop Reckless Activity
A tax on financial transactions will give us gobs of revenue.


December 4, 2012 |


Both the White House and House Republicans, publicly at least, are digging in their heels deeper and deeper in the so-called negotiations over what we call, alternately, the fiscal cliff, the fiscal slope, the austerity bomb, or the cable-talk-show topic of last resort.

Whatever logic either side pretends to have is irrelevant to the other side, because each is speaking a different political language and indeed a different economic language.

I agree with the White House on the substance of the debate, and I think the administration’s hand gets stronger over time . But as anyone who has been through negotiations will tell you, sometimes you just need a new idea to change the dynamic.

This one is not so new; it has been around for a long time, supported by a wide range of economists, including Nobel laureate James Tobin, as well as advocates, including Ralph Nader in the Washington Post this weekend, and elected officials: a tax on financial transactions. It will give us gobs of revenue. It will fall on a sector that has generated enormous and unwarranted profits for a very few, who at the same time have benefited from huge bailouts and regulatory help and largely escaped any responsibility for their central role in creating the financial cataclysm that we are still struggling with. ...................(more)

The complete piece is at: http://www.alternet.org/economy/eliot-spitzer-tax-traders-it-would-solve-economic-crisis-and-stop-reckless-activity

[Egalitarian Thug]

1. Have to run, but K&R and more later, I hope. n/t

[joeunderdog]

2. It will help to stabilize and normalize the market.

But I'm sure "over-burdening" the traders will be met with very stiff opposition. Bring it on.

[rhett o rick]

5. I like your enthusiasm but the ball is in our court. It's Wall Street that are saying

"go ahead peons, bring it on." They own Congress.

[russspeakeasy]

12. Nailed it.

[cbdo2007]

37. The market is stable over the long term.

Instability over the short term only hurts traders.

[Squinch]

3. This just absolutely needs to be done. And I invest in stocks. But it's just self evident.

[LeftInTX]

4. Wonder if the could do it via a state or local (NY) sales tax?

I can't see this working as a federal (income) tax.

[adieu]

11. Many trades are done automatically

by computers that have special algorithms for deciding when to buy or sell and at how much.

These computers have be to located reasonably close to the major trading floors (NYSE, Chicago, etc) because the milliseconds that it might take to get a signal from server to server might prevent the trade from occurring.

So, they should tax where the server is located.

[libodem]

6. So smart

Brilliant man.

[dreamnightwind]

7. I can't rec this enough

This simple transaction tax could help two of our most pressing problems: lack of revenue and runaway algorithmic trading that now accounts for some 40 % (top of my head, if that's the wrong figure someone correct me) of all stock market transactions. These transactions aren't really investments, the stocks aren't held for long at all (seconds in many cases), so they serve no useful purpose and are in fact a very destructive force.

It's an obvious fix that is receiving very little consideration, I wonder why? No doubt it has a lot to do with lobbyists and campaign financing. Thanks to Spitzer for making the point, and to marmar for the OP.

[littlemissmartypants]

8. LMSP kicking...n/t

[Vox Populi]

13. it's a dumb idea

This idea is not new - it's been tried before and it failed. Eliot Spitzer justs proves how ill-informed he is on how financial markets work.
If this tax is implemented as proposed, the immediate result will be a massive and permanent loss of transaction volume on US stock and commodities exchanges resulting in higher volatility because of fewer orders at each price. Trading will simply move to a more favorable location: UK, Sydney, Singapore, for example. The only people who will suffer because of this tax are people like you: small investors and people invested in mutual funds. Goldman Sachs won't pay the tax - they are exchange members and will be exempt. It is Goldman and other major banks who do the bulk of HFT transactions because they are the only ones for whom the frictional costs of trading are low enough to profit from trades lasting less than a couple of seconds.

The expected revenue from an FTT is ridiculous - based on assumptions that the transaction volume will not be substantially reduced, which is just flat-out wrong. If trading does not move abroad instantly, the guarnteed resultis that GSand others will simply invent a proxy for stock and commodity trades that mimic the underlying contracts but are themselves exempt from the FTT. This is what happened in UK - UK imposes a stamp duty on every stock transaction - except 70% of transactions are exempt - only the small investor pays them. So what do people in UK do if they wish to daytrade stocks? They buy CFD's (Contracts for difference) which are essentially just bets placed with a bookmaker and as there is no underlying asset transfer they are exempt from stamp duty.

I am sympathetic to the idea of making the bankers pay, but this FTT is not the right approach. It would be more palatable and would have the intended effect of reducing HFT if the transaction itself were assessed the fee as a flat amount (e.g. $0.001 per share or $0.10 per contract plus a fee for each order cancelled ) rather than being based on the underlying value of the asset. In this way only high volume traders would be impacted by the fee, while the small investor would barely notice.

[99th_Monkey]

16. "Eliot Spitzer ill-informed on financial markets" ???? Dude, what are you smoking?

Whatever it is, I'd ask for a refund if I were you.

[Vox Populi]

20. huh?

so which of my substantive comments do you object to? It's easy to be a tard with a smart-ass one-liner.

[99th_Monkey]

22. Fortunately, your opening assertion about Spitzer being "ill-informed"

saved me the trouble of reading the rest of your post. But since
you responded ...

The US is not the UK, and we live in a different time than when
this "stamp duty" was tried in the UK. Also you make an assertion
that "Goldman Sachs won't pay the tax - they ... will be exempt"
from the fees on trading that Spitzer's is proposing.

I'd be very interested in how Spitzer himself would answer how his
proposal is going to exempt Goldman Sachs from his proposed
transaction fees.

For starters, here's what Wiki says:

"Stamp duty was first introduced in England in 1694, during the reign of William and Mary under "An act for granting to Their Majesties several duties on Vellum, Parchment and Paper for 4 years, towards carrying on the war against France". Similar duties had been levied in the Netherlands. Stamp duty was so successful that it continues to this day through a series of Stamp Acts.

During the 18th and early 19th centuries, stamp duties were extended to cover newspapers, pamphlets, lottery tickets, apprentices' indentures, advertisements, playing cards, dice, hats, gloves, patent medicines, perfumes, insurance policies, gold and silver plate, hair powder and armorial bearings.

The attempted enforcement of the Stamp Act 1765 in the English colonies in America led to the outcry of no taxation without representation. The argument over stamp duty was a contributing factor to the outbreak of the American War of Independence.

"The scope of stamp duty has been reduced dramatically in recent years. Apart from transfers of shares and securities, the issue of bearer instruments and certain transactions involving partnerships, stamp duty was largely abolished in the UK from 1 December 2003. "Stamp duty land tax" (SDLT), a new transfer tax derived from stamp duty, was introduced for land transactions from 1 December 2003. 'Stamp duty reserve tax' (SDRT) was introduced on agreements to transfer uncertificated shares and other securities in 1986, and with the growth of paperless transactions SDRT rather than stamp duty now applies to most transfers of shares and securities."

http://en.wikipedia.org/wiki/Stamp_duty_in_the_United_Kingdom

You are making unsupported assertions about the specifics of Spitzer's proposal; i.e. that it is
identical to the UK's Stamp Duty. Also, do you support a Federal Real Estate Transfer Tax,
instead of Spitzer's plan?

[Dark n Stormy Knight]

29. Vox Populi pwned.

[99th_Monkey]

30. **snap** I forgot to say "welcome to DU"

12 posts and counting.

[Vox Populi]

34. here's why it's a dumb idea

First, in your wikipedia cut/paste, you bolded sections that are irrelevant. I'm not sure what point you were trying to make, but the fact is that stamp duty is still applied to stock transactions in UK. The line you missed says: "Apart from the transfers of shares and securites..."

The proposed financial transaction tax, while it may not be called a Stamp Duty, is exactly the same as that applied in England. It is a tax based on the value of the asset. As I said, this will not work. You asked why Goldman would be exempt: because they are market makers - as such they have an obligation to make a market. The market simply would not operate if market makers were obliged to pay the tax. They would necessarily be exempt. There are financial products that would also be necessarily exempt, e.g. forex transactions. These would be exempt because imposing a tax on a forex transaction would be ian illegal imposition of tax on a person outside of the US tax jurisdiction - ie. the foreign counterparty. This loophole would quickly be exploited. In a similar way to UK's invention of the CFD as a non-asset-based proxy for stock transactions, how long do you think it would take for Goldman to create a synthetic currency product that would be exempt from the tax and would mirror the movement of the S&P 500, for example? Not long at all. This type of innovation and/or the relocation of trading overseas is why the estaimtaes of potential revenue from this tax are ridiculously overstated.

I put forward a workable alternatve that achieves the desired goal of restricting the high-frequency trading that now dominates the market in index futures and is only possible as a strategy by the large banks that the tax is meant to punish.. Instead of basing the fee or tax on the value of the underlying asset, tax the transaction itself. This would make HFT less profitable because of the additional frictional cost while not imposing the burden on small investors - only large frequent traders would feel the impact and this solution would not have the effect of encouraging trading to simply move to a more favorable overseas location. Market makers would still be exempt from this fee in their role as market makers but the fee should be applied to their proprietary trading operations.
There seems to be an unwholesome view that the stock market is inherently evil - it is not. What is wrong is that the large banks and hedge fnds with colocated servers have an unfair advantage over all other traders by receiving the quote and order book information ahead of anyone else. It's important to realize that what they are doing is not simple arbitrage (which is in itself a valuable function that corrects mispricing) but is cheating - they take advantage of order imbalances before they are visible to other market participants.
A transaction fee would reduce the profitablity of this HFT strategy perhaps making it untenable - this is the desirable result.

I have no idea why you mentioned a Federal Real estate Transfer Tax - that has nothing at all to do with my comments.

[99th_Monkey]

64. I trust Mr. Spitzer's expertise on this subject far more than I do yours

In short, I trust Mr. Spitzer's expertise on this subject far more than I do yours. Besides Eliot Spitzer,
this proposal is also supported by Nobel laureate James Tobin, as well as other prominent advocates,
including Ralph Nader. I don't pretend to know lots about how financial markets work, so I rely on
others I do trust to be more knowledgable than myself (and who's world-view I resonate with), to
explain in plain language how this stuff works, and how we might improve on it. You, I don't know
from Adam; and you are still flatly making assertions out of thin air, without providing any LINKS to
anyone else on the planet with a shred of credibility who agrees with you.

The part of my Wikipedia cut/past that you apparently missed was, the UK's "Stamp duty was
so successful that it continues to this day through a series of Stamp Acts." This is the same
Stamp Act that you claim has "been tried before (in UK) and it failed".

As near as I can tell, your counter-proposal would be regressive, in that it would be a flat per-
transaction fee, rather than being based on the value of the commodity. If you really think your idea
is unique & original, and has merit i.e. meaning that it would raise lots of much-needed new revenue,
in a way that is fair to small-time traders, I suggest -- rather than carping about how it's a "bad idea" --
that you email or twitter Mr. Spitzer with your suggestion, so we can improve further on his good work.

Beyond that, I suspect that we're not going to change each others minds much on this.

PS - my reference to a Federal Real Estate Transfer Tax is related to the Wiki information, where it
says ""Stamp duty land tax" (SDLT), a new transfer tax derived from stamp duty, was introduced for
land transactions from 1 December 2003."

[ieoeja]

45. Planned enforcement of the Stamp Act in America was met with a shrug.

The problem was not so much "taxation without representation" as it was the incompetent administration. When they extended that requirement to the colonies it doubled the number of people subject to the tax while multiplying the area by 1000x.

They did not take this into account. A single manufacturer had the contract for producing the stamped paper. They were given inadequate time to double their production and setup a global distribution system. Any reasonable administration would have simply ignored the law until these things could be put into place. But not the court of King George III. They ordered enforcement of the act even in colonies which had no stamped paper.

It was, needless to say, a disaster.

[sulphurdunn]

23. The flat tax

on transactions might work too. Regardless of how it's done, financial markets need to be taxed, consistently and fairly. Part of the revenue should be used to prosecute crooked traders and CEOs. Aside from taxing financial transactions, I'd like to see an increase in the capital gains and inheritance taxes with no limit on income for FICA taxation. I think that such a tax regime would only reduce the top income tier's chunk of national wealth by a few percentage points. It wouldn't hurt 'em a bit. If it did, they could all move to Qatar for all I care right now. One day, we'll discover that we don't need financial speculators anymore than we needed kings and feudal lords. People at the tip of the socioeconomic pyramid are mostly parasites and always have been.

[Egalitarian Thug]

32. Utterly absurd. Not one of your statements is even remotely true. n/t

[Vox Populi]

35. you sound like a low-information teabagger

It's easy to make an unsubstantiated statement. What exactly did I say that is utterly absurd.

[Egalitarian Thug]

56. Was there something confusing about "Not one of your statements is even remotely true"?

Your entire screed is a tissue of lies and/or outrageous assertions with no basis in reality.

Just to start, the first two sentences.
"This idea is not new - it's been tried before and it failed" It has not and therefore could not have failed.

" Eliot Spitzer justs (sic) proves how ill-informed he is on how financial markets work." Completely unsubstantiated charge you just pulled straight out of your ass. He has a well established record of investigating and prosecuting financial crimes in the heart of the global finance industry.

And just for the record, I have had personal, professional dealings with this man and hate his guts with a white-hot passion, but your (nearly illiterate) assertion that he is ignorant of how financial markets work is comparable to a claim that Jesus Christ rode a brontosaurus into the temple to throw out the money-changers.

[Egalitarian Thug]

61. You post is there for all to see and I quoted it directly.

I started with only the first two sentences and you can't even defend those without resorting to a sad attempt to divert from them and name calling.

If you have anything like a thoughtful argument, have at it.

I think we both know that you don't. This is not Yahoo! groups or redstate where this crap is tolerated, you come here prepared or go home sad.

[bvar22]

36. Your speculations are based on unsupported theory.

You claim:
[font color=firebrick]"If this tax is implemented as proposed, the immediate result will be a massive and permanent loss of transaction volume on US stock and commodities exchanges resulting in higher volatility because of fewer orders at each price."[/font]

Do you have any research to support this claim?
It sounds a lot like "You can't raise taxes on the Job Creators because they will stop creating jobs."

The Market worked just fine at lower volumes before the computers and High Speed Transactions became so common.
In fact, it wasn't until the High Speed Transactions began to dominate the market that we started having a problem with volatility. HISTORY contradicts your theory.



You stated:
[font color=firebrick]"Trading will simply move to a more favorable location: UK, Sydney, Singapore, "[/font]

Why should we care if we aren't getting a cut anyway?
Perhaps those markets will follow our lead.

[Vox Populi]

38. here's some facts

Yes, I do have research to support my statement. If you care to learn more about the possible effects of suchj a tax, i suggest you visit this website: http://financialtransactiontaxes.com./

Your statement that the market was less volatile before the advent of HFT is just silly. 1987 is an obvious example. 1929 is another obvious example. History does not contradict my statements.

[bvar22]

39. Thank You for your Return Address!!!!

From the link provided by Vox Populi

[font size=3]
THE BOTTOM LINE

The International Monetary Fund, The World Bank, Oxera, The Center for Policy Studies, The Dutch Central Bank, The European Central Bank, The European Federation for Retirement Provision, EFAMA, CPB Netherlands Bureau for Economic Policy Analysis, university professors from Berkeley, Harvard, MIT, Lund University (Sweden), HEC-Sciences Po (France) and many others oppose “Robin Hood” transaction taxes...[/font]

http://financialtransactiontaxes.com/ftt-robinhoodtax/

What we all suspected has been confirmed....by you.
We now KNOW for whom you are carrying water.

[Vox Populi]

40. no, you don't

I have nothing to do with that website. I posted the link because I sensed there was a general ignorance on ths board of the repercussions of an FTT.

I find the attitude of people on this board quite disturbing. There is a general animosity towards anyone who posts something that goes against what is perceived to be liberal orthodoxy. In my case, I stated that Eliot spitzer was ill-informed on this subject. He is - and I backed up that assertion with facts, but there was an immediate, visceral knee-jerk reaction to attack me for having the temerity to criticize a liberal hero. People on these boards laugh at posters on conservative boards because they are perceived to be living in the conservative echo chamber of Fox News, Rush, Red State, Free Republic, etc and are wifully immune to any ideas that criticize the harmony of their orthodoxy. These boards are in many ways similar and equally as intolerant as evidenced by the inane responses to my initial posts "Vox Populi pwned", for example. Serious discussion of any subject is not possible if this corrosive attitude is commonplace.

I am a liberal. I canvassed for Obama during the campaign. I am not the enemy. I do not post often and probably will not do so very oftenin future because I find the attitude exemplified by your gleeful, fact-free bashing to be irritating and pathetic.

[bvar22]

41. Yes I do. Fair Game!

You posted that information and that link to support YOUR claim that Eliot Spitzer didn't know what he was talking about.

It is OK for me to point out that you share your opinion with:

*The IMF

*The World Bank

*The Dutch Central Bank,

*The European Central Bank,

Gee, I wonder if any of THOSE players have "skin" in the game.
I'm SURE that the CEOS, Stock Holders, and Marketing Departments of those organization go to bed every night worrying about my poor little Working Class ass.

[Vox Populi]

42. you don't make sense

those organizations you cite whose views i share are not corporations. They don't have CEO's and stock holders. Do you know what they do? I think having the head of the World Bank share my views is a bigger endorsement of the argument I put forawrd than sharing the view of a politican without a background in financial markets, not that I was using an argument from authority. I actually posted reasons for my statements that purposely did not quote or paraphrase supposed authorities; I thought logic, facts and rationality would suffice.

How stupid are you? Every post you make just continues to advertise your ignorance.

[bvar22]

43. Admittedly, I was in error.

Those organization ARE very private and NOT subject to the whims of common investors.
The are run by the very pinnacle of The RICH Investor Class, who no doubt profit every single day from the type of trade Spitzer has proposed to tax.

I've already admitted I'm just a common working class ass,
and everybody here already knows how stupid I am.
The question is not how stupid I am,
but how STUPID are YOU?

Did you really believe nobody would check out the website from where you pull your "supporting arguments" ?
You came with that link so fast, it doesn't take an Einstein to deduce that your already knew exactly what keys to press.
Hang out there much?

I'm sure you can also find some Wall Street Banks that also agree with you that Spitzer doesn't know what he is talking about.

[Vox Populi]

44. lol - are you some kind of conspiracy nut?

Of course I expected that people would check out that website - that was the point of posting the link!

I can see that you and logic have only a nodding acquaintance so i won't bother to counter your latest post - I don't know exactly what are alleging anyway. Perhaps I should just admit that yes I am a member of the Illuminati and the black helicopters should be above your house any minute.

[bvar22]

46. 2 Strawman Logical Fallacies in one post!

I have not posted a Conspiracy Theory, or claimed a conspiracy of any kind.
Your claim that I have only exposes your desperation.

You also Claimed:
[font color=red]"Perhaps I should just admit that yes I am a member of the Illuminati and the black helicopters should be above your house any minute."[/font]

Nobody had said that....except YOU.
This is delicious irony in that you used this to attack me as having "only a nodding acquaintance" with LOGIC!!!
Excuse me for a moment while I enjoy the Schadenfreude.

What I have "alleged", after examining the substance of your posts here, and examining the site you provided,
was that YOU are Carrying Water for the wealthy minority that have a financial interest opposing the types of reforms that Spitzer has suggested.
Whether you are doing this unknowingly (duped), unwillingly, as a paid operative,
or merely protecting your own financial interests... I have no way of knowing.

I STAND by my post.

[Vox Populi]

47. whatever

If you were smart enough to understand my points, you would realize that my point is that the tax would end up being paid by us, the general public, and not by those it is intended to hit. But you're not that smart and have no intention of even trying to understand my points, so i'm done arguing with you. You don't even understand humor, it appears.

[bvar22]

50. You're "done" OK,

...but not because of the baseless personal accusations (also a logical fallacy) you posted in a desperate attempt to save face.

[font color=firebrick]
[font size=3]"Waaa. You and Eliot Spitzer too stupid to understand the brilliant arguments of the RICH Global Banks and Wall Street Investment Houses that oppose ANY taxes or regulations."[/font][/font]

Right.
Got it.

Both Eliot Spitzer and Myself understand your "points", we just don't BUY them.
We've heard them all before.
No Sale.

You are perfectly welcome to represent the Global Banks and Wall Street Houses here at DU,
and keep posting rhetoric and marketing from their websites.
There are even one or two posters here who will agree with you,
but you won't be able to slide conservative talking points into the debate unchallenged,
and you will have to put on your Big Boy pants to play here.

Have fun!





You will know them by their WORKS,
not by their rhetoric, promises, or excuses.
[font size=5 color=green]Solidarity99![/font][font size=2 color=green]
--------------------------------------------------------------------------------------------------------------------------------[/center]

[AikidoSoul]

48. I agree with Vox Populi on his proposals. I also agree that the general attitude displayed

here on DU in response to his posts are disappointing, and mean spirited.

It could be that the many on DU don't have sufficient foundational knowledge about the topic to have a good conversation about this topic. What we see are knee-jerkers reactions.

Be patient with DU Vox Populi....and do continue to educate. We have many bright, even brilliant people on this list serve. But finance is not necessarily a topic that many of us study. It's a highly complex area and we all need to know more. I personally know small investors who are screwed by the simple fact that there is a lag on the information they receive, compared to the big boys. I also know that even small investors have no objection to a small tax on transactions if it does some good for bringing down the deficit, or repairing decayed infrastructure.

A small tax on all transactions can be a sensible idea if presented with care. It could be tied to a "doing your duty for the country"....or tied at least to making this country whole again. Our infrastructure sucks. Roads, bridges, etc. Tie it to something specific and if there is a stink, it would make the naysayers look selfish, mean and unpatriotic.

Am I being too optimistic?

Welcome to DU Vox Populi

[Squinch]

52. +1

[Vox Populi]

54. thanks man

After reading the ravings of someone obsessed with italics and boldface, it's nice to come across a sane person.

As i have said (but not well enough), I am not opposed to the idea that those that caused the global financial crisis should be made to repay the public for their unconstrained rapaciousness. But, the FTT as proposed (a tax basd on the value of the asset traded) is a really stupid idea. This would primarily hurt the general public and miss the big financial institutions. Thee are many better ways to force the banks to pay for their greed. A simple solution is to change the FTT so that the tax would be levied on the transaction and not on the value of the asset. This is workable and wouldn't have the deleterious consequences of the idea championed by Spitzer (which btw has been around for a while, has little support, and has zero chance of being enacted).

Thanks for the kind words.

[Egalitarian Thug]

62. Do you have any idea how many degrees and decades of experience you are poo-pooing

with your dismissive, and still unfounded, assertion that this offensive person has any idea of what he is talking about?

Do you really believe that, even if his unfounded contention that Sweden's results demonstrated causation were true (they're not), that it is at all comparable to the New York markets? And if you do, on what do you base that belief?

[Squinch]

51. But if it were applied as described in the article, a fee for every $100

transacted, wouldn't that be essentially be the same?

Confession: I read the OP without reading the article, and I thought we were talking about a fee per transaction based on cost.

Are you saying that if it were levied as a fee, the larger players would not be able to get out of it, whereas if we call it a tax they can? How does that work?


Edited to add: WELCOME!!!

[Vox Populi]

55. let me clarify

The FTT as proposed would be a tax based on the value of the asset. So, if you wanted to buy 100 shares of AAPl at $600, right now that would cost you about $10 in commissions from a retail broker, about $1 i or less if you used a retail broker for more active traders.

The FTT at 0.25% of the value would mean it would cost an additional $150. $600 * 100 = $60,000 * 0.25% = $150
So, after buying 100 shares, you're already $1,50 per share in the hole! To break-even, AAPL would have to rise to 601.50 (if the tax were applied on a round-trip) or to 603 if per side. Even if you don't trade, the manager of your 401k or pension fund does - these costs will be passed on to you.

My alternative is to say the fee should be per transaction. So 100 shares of AAPL at (e.g. $0.01 per share fee) = $1 in extra taxes. This is palatable to small investors but it absolutely kills the HFT programs who need a price move of $0.02 now to break-even. This is a good thing. BTW, market makers would have to be exempted from this tax in their role as market makers, but not in the proprietary trading operations, which is what they use for HFT.

[Squinch]

57. So you are saying that it would be better to apply a fee on # of shares transacted than

the proposed percentage of price fee. Is that correct?

That does make sense.

But you were saying that the larger investors and institutions would be exempt from a fee based on price. Would that not apply to a fee based on share quantity?

[Vox Populi]

59. no - just that it has more chance of working

I think the same exemptions apply in both cases - market makers must be exempted, for example. But, the transaction fee is much lower and wouldn't have the devastating consequences of the asset-based tax. In terms of net revenue, I think the lower fee would actually bring in more revenue. The FTT as proposed would reduce liquidity dramatically and send most business overseas. As the financial sector is so important to the economy, I suspect the tax could be negative for revenues: on the plus side, you have the income from the FTT; balanced against this, you have the loss of tax revenue from the hit taken to the financial sector, both the lower profits and job losses and knock-on effects on GDP.

[Squinch]

60. Thanks! That does improve my understanding of this. And again, welcome.

[1StrongBlackMan]

14. Bottomline ...

High-speed trading and speculation have overtaken the economically legitimate reasons for our desire to have highly liquid markets: the capacity to raise capital and then allocate it efficiently among sectors and companies.

The stock market stopped being about the raising and efficient allocation of capital when the bankers realized that with high-speed trading, they could make millions by exploiting very small price swings in stock prices.

[99th_Monkey]

15. YES!!! This should be self-evident and obvious to anyone

with half a brain. Of course that leaves out the Tea-baggers, but
so be it.

You go Eliot!!!!!

[byeya]

17. Several Industrialized nations have such a tax; it's not hard to figure out.

[Selatius]

18. I'd actually be more in favor of a tax hike on capital gains. 25% tax rate on gains over $100,000.

That'll collect a hefty amount of revenue while largely avoiding hitting working class and middle class folks that need every dollar they can get.

[northoftheborder]

24. No one is suggesting going back to previous years, when there was a difference in the tax owed....

....a smaller percentage on long term tax profits and more on short-term profits. Long term used to be 5 years, then changed to 1 year, then eliminated altogether. Seems to me that assets held over longer terms stabilizes the volatility, and rewards that behavior. Now, it is just wild, trading in nano seconds all the time. Guess no one has the patience that we used to have.

[AikidoSoul]

49. I agree with you that rewarding longer term investments is a good idea

It's the wild second by second gaming of the gambling system that now exists that is making the financial system shaky.

It's crazy.

[Selatius]

53. The market needs both to maintain liquidity, in my opinion. However...

Since, as you said, the distinction between short-term and long-term investments has essentially disappeared, it seemed like a good idea to exempt the first 100,000 in income. Heck, I'd be willing to have a smaller exemption pegged at 40,000/year, now that I mention it. The average working class or middle class person would likely never approach making 40,000/year in investment income as opposed to payroll income, which is unfortunately taxed at a higher rate.

[WillyT]

19. HUGE K & R !!! - Thank You !!!

[Grey]

21. Neat and simple idea,

Just Google The Tobin Tax. It is about .05% (possibly less) on transactions above $XX amount, neat and sweet.

[Octafish]

25. First heard about this from some nice nurses, a short time back.

http://usnews.nbcnews.com/_news/2012/05/18/11757222-nurses-yes-nurses-lead-charge-for-wall-street-sin-tax?lite

I love nurses.

[limpyhobbler]

26. K+R

a simple but powerful idea

[dae]

27. Maybe he good get Sen. Warren to sponsor this and

watch the Banksters writhe in agony.

[PufPuf23]

28. A tax on financial transactions is self-evident

for:

1. Stabilizing markets.

2. Leveling the playing field for different classes of investors.

3. Reducing arbitrage opportunities (profits where no actual value has been created; the profits comes from the ability to take advantage of differential pricing because of market access and actual or financially engineered parallel markets).

4. Raising tax revenue.

Automated program trading largely profits by arbitrage opportunity from volatile (unstable) markets eg frequent trading profits are made from market price movement rather than market price level and stability.

[Egalitarian Thug]

31. Even a .25% across-the-board federal transaction tax would be sufficient.

This is one of the things that people should be calling for, because Congress will never do it.

[Overseas]

33. K&R. I wrote to my congresspeople saying that until this has been tried there is no reason at all to

touch SSI, Medicare or Medicaid.

Unless we're giving Medicare drugs the competitive pricing the VA gets,

or unless we're lowering Medicare eligibility to age Zero.

[pampango]

63. Meanwhile in Europe: EU Moves Ahead With Transaction Tax in Rejecting U.K. Changes

The European Union has moved ahead with a plan to design a financial-transaction tax for participating nations, rejecting the U.K.’s requested changes to the proposal, an EU official said.

The U.K. had sought a series of wording changes to the European Commission’s proposal, according to documents obtained by Bloomberg News. National ambassadors to the EU on Nov. 30 rejected those changes and opted to seek European Parliament approval with the commission’s existing language, the official said on condition of anonymity because the deliberations are private.

All 27 nations and the EU parliament must agree for the Brussels-based commission to design a tax for 11 willing nations under so-called “enhanced cooperation” procedures. Skeptical nations that won’t take part, such as the U.K. and Poland, have said they won’t allow the smaller group of countries to proceed unless they know what to expect.

Accepting the U.K.’s wording request would have been an unjustified step backwards on the proposal, a European Commission official said.

The commission’s proposal says that the plan, as currently offered, fulfills treaty requirements to avoid damage to the single market or other nations. The U.K. amendments would have stated that the final proposal “should” avoid such discrimination, according to the documents.

http://www.bloomberg.com/news/2012-12-03/eu-moves-ahead-with-transaction-tax-in-rejecting-u-k-changes.html