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View Diary: President Obama's Opening Move: Raise $1.6 Trillion In New Tax Revenue From The Wealthy (222 comments)

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  •  A profit is a profit, whether it is taxed at 35% (5+ / 0-)

    or the current short term capital gains rate of 28%.  So increasing that tax rate won't reduce speculation any more than it would stop people from going to Vegas or playing the lottery.  However, the beauty of a transaction fee (even 0.1%) is that it will cut down on churn and arbitrage.  Even that modest 0.1% would introduce enough friction into the system and have great effect on computerized strategies that trade in and out of a position thousands of times per second as happens today.  These trades have nothing to do with company fundamentals and are all about momentum.  Even worse, they can lead to collateral damage like the almost yearly "flash crash" events that have been popping up.

    There is a quote from Warren Buffett about how he wouldn't care if the stock market were open for just one day a year.  He would know what he needed to buy/sell and could spend the rest of the year confident in his investment decisions.

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