"Rejected by the GOP?" Give me a break!
This bill passes, and 2000+ DJ points will come out of the market so fast it won’t be believed.
It’s the War on Wealth.
RECIPE TO KILL THE MARKET:
“The way it will work, is to simply levy a .25% on every transaction.” — on EVERY TRANSACTION!!!!
IOW, you pay tax when you buy and also when you sell.
Traders tend to trade a lot of shares and make a very small percent, they make money, because of the large amounts they are RISKING. They make many transactions a day, buying and selling different stocks all in one day.
E.g. someone buys 10000 shares of a $10.00 per share of stock, so that is $100,000 to buy. He pays $250 in taxes.
Later that day he sells the stock for say 10.20, for 102000.
He pays another $255 in taxes.
His profit would have been $2000, but now he paid $505, in other words, 25% tax on his profits! So he is left with $1,500 (rounded up)
Then he has to pay income tax on it, as regular income on $1500 — 39% federal and some sales income tax, say 10 %, again, rounded up, that’s 50% of the 1500, or $750 NET profit.
So after he made $2,000 profit, by RISKING his own money,
he only gets to keep $750!!!!!, having paid
62% in taxes.
As any traders, if they want to RISK their own money, when they only get to keep 37% of their profit.
If you think that’s bad, imagine the futures/commodities market.
Futures trade in incredibly large denominations...a single oil future is something like 100,000 barrels. Treasury futures are $100,000 and $200,000 each; Eurodollar futures are $1 million. Corn and soybeans are comparably large amounts.
Do you have any idea how illiquid these markets would become if one transaction on a single contract cost $2500, and your profit margin was going to be less than that to begin with?
This would destroy futures markets, meaning it would be impossible for farmers, drillers, or manufacturers to do business. There would also be no foreign exchange (except perhaps for government transactions), making travel and international trade virtually impossible.
this bill would be the death of liquidity in the market, and presumably of the market itself.
for stocks, this will end program trading as it exists now, and also reduce liquidity hideously. I don’t know if a market-maker or proprietary firm trading exception is even contemplated. Even 1/10th% would be a disaster. Traders across the street would suddenly see their way of life become anywhere from a lot less profitable to a net-loss.
The scary thing is that there are no functional rules anymore on what can or cannot actually be passed, even some moronic legislation like this. There has been a stealth coup and the financial environment is being used as an excuse to do everything the looters have wanted to do for decades.
I watched an interview with the rep who offered this bill, and it was pretty clear he has negative emotional issues related to traders. He apparently has often proposed this kind of madness.
They broke it, they should buy it!
"Rejected by the GOP?" Give me a break!