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View Diary: Open thread for night owls: The rich are recovering fine, the rest of us aren't. That's no accident (86 comments)

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  •  I wish people... (0+ / 0-)

    ...would think carefully before advocating the financial transaction tax (aka, the Robin Hood tax).

    We should tax each firm's trading profits, and we should do it at a higher rate.

    We should tax the personal income of individuals at a higher rate.

    But taxing transactions does nothing but reduce liquidity and make the US financial industry less competitive.

    Please note that the biggest advocates of the Transaction Tax are foreigners from countries that don't have a world-class financial sector. People come from all over the world to use our financial markets. We get to regulate the trades and we get to tax the traders. It is a clean-and-green industry that generates no pollution other than swear words.

    Don't tax transactions: Tax profits.

    Do we tax a writer every time he finishes a sentence?
    Do we tax a farmer each time he plants a seed?
    Do we tax carpenter each time he cuts a slab of wood?
    No. We tax the income generated by the finished work, when it is published, harvested, or sold.

    We need to keep it the same way with finance. If we don't, the deals can be moved to Dubai, Hong Kong, or elsewhere. Then we lose the jobs, the income, the tax revenue, and (most importantly) the regulatory control. Elzabeth Warren has no subpoena power in Dubai!

    Transactions taxes are a bad idea that distracts us from good ideas.

    •  Can you put it into context? (1+ / 0-)
      Recommended by:

      Say I sell 50 shares of company A for $1,000 -- and buy 10 shares for company B for $1000.

      How much tax do I pay on these two transactions?

      (I realize whether I have a profit or loss is irrevalent.)

      I bet we all would like to know.

      Denial is a drug.

      by Pluto on Sun May 05, 2013 at 11:32:42 PM PDT

      [ Parent ]

    •  it used to be (3+ / 0-)
      Recommended by:
      dharmafarmer, DRo, JeffW

      that people bought and sold stocks through a broker, who charged a fee.  A "transaction tax".  Everything worked fine.  Of course that was back in the days when "the market" was more a "market" than a casino.

      The "big players" were mostly exempted from that, then as now, but back then "the market" wasn't run (and gamed) so completely by the big players, either.  Now, with computers doing the "programmed trading" and pretty much the whole thing rigged and manipulated of, by and for the 1%, we need a "transaction tax" to (begin to) recapture "the market" as . . . a market.

      A transaction tax of 0.5% (a common broker fee in the old days) would do a lot to restore (some) order, and generate some needed revenue as well.

      It certainly wouldn't hurt to tax capital gains like regular income again, close the "rich man's loopholes" and remove the cap on the payroll tax too.  For a start . . .

      Fake Left, Drive Right . . . not my idea of a Democrat . . .

      by Deward Hastings on Mon May 06, 2013 at 01:47:48 AM PDT

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      •  Everything was *not* fine. (0+ / 0-)

        Back in those days, only the rich could afford stocks.

        You had to be rich enough to afford the tax and you had to be able to hold illiquid assets while you waited for the stock to (hopefully) rise enough to cover the broker's fee.

        But your post brings up another big misconception about the Transaction Tax:

        "A transaction tax of 0.5% (a common broker fee in the old days) would do a lot to restore (some) order..."
        Many people like the TT because they think it will slow down high-speed trading, or give incentives for people to be "long-term investors". Fine. If you want to outlaw high-speed trading, just make it illegal.

        If you want people to hold stocks for years instead of days, just mandate that they do so. Put in a punitive tax for early sellers (one already exists, actually)

        The SEC can outlaw high-speed trading tomorrow, with no legislation required. We don't need this destructive Transaction Tax to do it.

        •  no, wrong, and (0+ / 0-)

          it is much easier to impose a simple transaction tax and let the market itself figure out what is "investing" and what is market-manipulating "churn".

          It is hard even to define "high-speed trading" (for purpose of regulation) . . . but a 0.5% transaction tax would put a stop to whatever it is.  It would have no negative effect on real "investing" . . . and half a percent is still nowhere near society's "fair share".

          Fake Left, Drive Right . . . not my idea of a Democrat . . .

          by Deward Hastings on Mon May 06, 2013 at 09:38:03 AM PDT

          [ Parent ]

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