Another run at taxing stock transactions
We've felt for a long time that a small sales tax on transactions in stocks, options, and the evil "derivatives" would be a good idea, particularly if the deals take place on an established market. We tax Grandma if she wants to fly on an airplane, or have a cell phone, or have a maid, or put gas in her car. The people who use our securities markets should not be immune. To us, the case for a financial transactions tax is an easy one.
Bluegene Congressman Peter DeFazio is reportedly poised to reintroduce his version of such a tax any day now, in a bill co-sponsored by Sen. Tom Harkin (D-Iowa). The bill would impose a 0.03% tax on such transactions -- if you move $10,000 worth of stock, you pay $3. The feds would collect $352 billion over 10 years. And the people who churn the market for big-time gambling juice -- and bring on "flash crashes" in the course of doing so -- will pay to play.
You can bet there's a lot of opposition to this idea. If you cock your ear toward Dunthorpe, you can hear the screams of outrage. And it's a sure thing that the Wall Street sellouts in the Democratic ranks, including the President and Ron Wyden (R-N.Y.), will once again quietly do what they can to sabotage it.
This guy's got an even more "progressive" idea (scroll down to "Structural Problems" and click on "more"): make the rate of the tax adjustable, and move it up and down to control volatility in the markets. Now, that's enough to make Mitt Romney's head turn all the way around and spray out pea soup.
| Posted at 6:46 AM | Permalink |
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Comments (10)
Didn't help too much in 1927. Not sure why it would do more today.
Posted by dg | February 11, 2013 8:03 AM
Yeah, because nothing at all has changed in the financial markets since 1920. Good grief.
Posted by Allan L. | February 11, 2013 8:22 AM
Of course, the way to make equity markets more regular and sane is to tax and reduce the number of transactions, that's perfectly obvious -- to anyone who doesn't understand markets.
I mean heck, why not dial trading back to 1987, when there was no high speed trading to step in and catch that one-day 22 percent crash -- and then it took more than a year for recovery.
In the "Flash Crash" US stock markets hiccuped for an hour or so before immediately recovering while the gangbuster four-year bull market continued. That .0001 percent interruption, typically in the progressive mindset, is the basis for making policy affecting all transactions, all the time. That's so wise, next thing you know this will be called a smart tax.
I know that progressives hate middlemen. But hate is wasted emotion. It takes middlemen for markets to work.
Posted by Newleaf | February 11, 2013 8:55 AM
This could be a very small tax to limit the dangers of high frequency trading computers. Us mortals wouldn't notice it, but the computers making hundreds of trades per second for a fraction of penny would now be paying a tax of a fraction of a penny at the same time. Not so worth it.
I'm not so sanguine as some here on letting computer programs crowd rational actors out of the market. We had markets for hundreds of years without high frequency trading.
Posted by Snards | February 11, 2013 9:24 AM
That's so wise, next thing you know this will be called a smart tax.
hehehe
Posted by cc | February 11, 2013 9:34 AM
I think the people who profit from the high speed trading are the ones who lose when they fail. Gee a computer is selling apple stock at half price? Sure i'll buy!!
Because giving more money to incompetents solves the problem.
Stuck in his old-school east-coast liberal ideology, he still can't see that government is greatest impediment to human rights and prosperity even though he painstakingly and selflessly resists tyranny, often at his peril, for our betterment citizens. He is Bruce Wayne of our depraved metropolis, in love with an ideal that can never be met.
Posted by Pistolero | February 11, 2013 9:51 AM
That might be OK, but any new tax always has that creeper affect where the percent taken always goes up, rarely down.
The real issue is good paying jobs are nowhere to be seen. The tax base will never be adequate until we rebuild America.
I don't hear too much talk about that these days - just hot air about taxing the rich - who know how to hide their wealth, regardless of latest tinkering.
Posted by Tim | February 11, 2013 10:42 AM
Pistolero, if the computer messes up and you buy Apple for half price, the trade would be voided. You don't get to win.
Wall Street isn't some Ayn Randian paradise. It's generally a bunch of rentiers, protected by laws they've bought from Congress, sucking money out of the productive economy by inserting themselves in other people's transactions and pocketing 1% for themselves. They always win, and you and I are the "muppets."
That's the glory of "middlemen" in the market.
Posted by Snards | February 11, 2013 11:18 AM
Heck Yea tax the #*^&*# transactions. If you take the Schwing out of the dirty game, then some will move their money into productive areas [I am looking at you Or Pension Fund]. Imagine a country where investors fund new business start-ups and build factories and buy into infrastructure trusts, instead of fleecing granma.
What side of the ball are you on Sen. Wyden? Ours or theirs?
Posted by tda | February 11, 2013 2:49 PM
"And it's a sure thing that...the President and Ron Wyden (R-N.Y.), will once again quietly do what they can to sabotage it."
Well, "Permalink," a lot of money has been lost betting on things some knee-jerk labelled a sure thing. Pure conjecture with no factual basis doesn't advance the discussion. Any tax proposal will bring out the ideological hatchets, as this already has, but no one can say yet whether Obama or Wyden will oppose this. My view: anything that slows down and reduces the huge volume of computer-driven trading is a plus for the average investor, and helps rationalize the market. If it raises significant revenue in the bargain, it's a clear winner.
Posted by Jim Gardner | February 12, 2013 12:15 AM