Posted on 08/14/2004 3:06:58 PM PDT by Licensed-To-Carry
I don't see why ... you pay the same whether you make a hundred small transactions or one large one. I can't see Americans refusing to be consumers anymore because of a national sales tax. Sales taxes on the state level haven't done that.
This has to be the most idiotic tax proposal I've ever heard.
Implementing a tax on financial flows will drive those transactions offshore and ruin our financial markets. It will have an effect on our economy similar to dumping sand into an internal combustion engine.
Politically, Ted Kennedy will be nominated by the Republicans before this would get enacted. Any politician insane enough to propose this wouldn't get a loan from any financial institution in the country. Declaring war on the money industry will kill any politician's career in five minutes (outside of those politicians representing Communist areas like Berzerkly, Ithica and Madison).
Only an academic nut safely protected from the real world could propose such an ignorant scheme.
I sure the President of the U of Wisconsin will be happy to read this trash. Good luck fundraising with this ignoramus alienating the financial community.
Your tax dollars at work!
There's the first sensible objection I've seen here yet.
As far as any concern about "alienating" the lawyers and accountants that benefit from the current scheme ... I'll just be nice and say that I wouldn't mind alienating them. :)
I disagree.
If all I buy now is coffee, cream and sugar ... and I don't 'mind' the 6% on that, what more could I use with my coffee, cream and sugar?
Maybe bread for toast or butter for the bread, but I'd eventually get back down to, or close to, the original coffee, cream and sugar.
People do what they do because that's all they are afforded to do. If anything, more money in the pocket might mean more debt ... now I can afford the monthly car payment instead of paying 4 or 5 hundred in cash for a two or three year miracle.
I've not paid more than $500 in the last 15 or so years .. maybe 7 or eight cars in that time ... if at $500 ea, (and they weren't all), yer lookin' at 4g over 15 years ... plus maintenance ... what? maybe 10g?
New (throw-away) rides start at 12 or so.
Many of the state governments already tax stupidity. They call it "Lotto" in Florida.
Brazil once tried to impose a tax on securities transactions. Their stock market still hasn't recovered from the utter evacuation of capital which this caused. I cannot believe that a professor of economics has seriously proposed this idea, unless he is a flaming Marxist.
You did pretty 'til that last paragraph. You shouldn't type while looking over your shoulder.
Thoughts? Opinions? It looks like a good idea to me, but what do I know, I'm a dumb grunt.
That itty bitty tax would get progressively larger each time Congress meets. The point of dinminishing returns would be the onset.
The author of this proposed plan doesn't understand the mkt mechanism at all. He says blithely that ''day trading and ... will decrease'', and to that extent only, he is correct. However, even notwithstanding the relative idiocy of the tactic of day trading, this tactic and others (arbitrage, conversions, reversals, etc.) perform an enormously valuable service to the mktplace as a whole: they increase overall liquidity, which is absolutely essential in mkts traded on a worldwide basis, as most stock mkts and many futures mkts now are.
Tax the day trader, the floor specialist, the market-maker -- even to his putative ''fair'' rate of 0.6%, and some considerable fraction of these folks will pick up their marbles and go home...and everyone else in the mkts, save only the huge institutions, will be adversely affected, beginning with the very next trade.
The OTHER huge error in this notion is that the ''value'' of a financial transaction is necessarily a known quantity. This is outright rubbish. What's the taxable value of my purchasing one contract of September crude on NYMEX, say, at the close of yesterday's mkt? The mkt settled at $46.58/bbl, the contract size is 1000 bbls. Does this mean that he proposes that the entire contract value of $46,580 be taxed at 0.6%? Good luck, Jack; that turns out to be $279.48. He wants buyer and seller to each pay half that, 139.74? Won't happen. EVER!.
Why? When one adds in normal brokerage commissions (are THESE to be taxed, too, btw??), the bid-ask spread in the mkt, and assorted floor and clearing charges, this total cost will work out to something like $160.00/contract just to enter the position, with ANOTHER $160 or so payable when the position is closed out. $320.00 in crude is 32 points, so therefore the trader will be required to be correct in his mkt view to the extent of 32 points BEFORE making any profit. Congratulations, you academic jackass, you just shut down every futures mkt in the world. NO TRADER WILL PLAY under these terms, dorkasaurus...and the futures mkts will close.
Now, I think I can guess what yon bozo will say here: ''No, no -- the trader only puts up $2200 or so per contract in order to trade, so THAT figure is the taxable one.'' Traders MIGHT live with that extra cost, about $13.20 per trade, but I'll tell you who won't -- and their presence is every bit as necessary to liquid mkts as is the presence of the trader: the floor traders (''locals'') and some number of market-makers. The mkt-makers many times operate on far LESS than $13.20 per contract as a profit margin, and some considerable number of locals will say: ''Screw this, I'll just trade electronically.'' Others, of course, will find some more profitable way to spend their time. In either case (and I've nothing against e-trading at all, btw), liquidity will further suffer. These problems are exacerbated to one or another extent in the spot forex mkts, too, btw. Traders outside large institutions are already unhappy with the quoted spreads -- and this ding-a-ling proposes to expand them? Sheesh.
There are dozens of other problems with this loony-tune scheme, too. Show me, Mr. Professor Putznagel, how you propose to tax option transactions. Is the taxable amount the gross value of the option? The net after commissions and costs? The amount of SPAN margin required?
As (maybe not even) a final insult, this thief proposes (read the article again if you don't believe it) to levy this tax ANY TIME one adds funds to or removes funds from a brokerage account. No ''transaction'' here, just taking out of one pocket and putting into another.
Bah! Go shoot an elephant, you thieving redistributionist nimrod, so you'll have some raw material with which to repair your ivory tower after the traders of the world blow it to bits with a nice surplus howitzer.
We obviously need to completely re-vamp the tax system in this country. However, this will never happen, judging by the reactions on this board whenever ANY type of solution is introduced.
The reactions seem knee-jerk, not thought through. With something like taxes, we need to study any and all proposals to simplify.
But, I have yet to see any proposal given on FR that is not met immediately with disdain, negativity. Oh, and intellectual arguments like "this is stupid". Not even parts of proposals are accepted.
At this rate, our total tax burden will continually increase and the printed tax codes will eventually eat up all trees on the planet, and most storage capacity on HD's.
I hate those hidden little taxes. Another really onerous one is the VAT.
True tax reform comes when we have a flat income tax -- and everyone is required to write a check out, once a month, for the amount of tax due to the government. Every month. No withholding.
Any flavour of this tax at a rate in excess of one-tenth his stated ''fair'' tax rate (and probably not even that high) will have the net and immediate effect of causing considerable numbers of people to quit, be fired, and/or simply abandon their current business in favour of something else (and that ''something'' is very likely to be offshore, too).
Ever notice that Tax Day (April 15) is exactly almost 6 months away from election day? Do you think it is an accident that taxes and elections are as far separated as possible?
I think a good start would be having elections April 16.
Hidden taxes....my property got reassessed upwards 30%. Everyone who gets a piece of my property taxes just got a 30% increase. The governments who get the money never mention it...yet they are coming back with a ballot initiatives to raise taxes in excess of the cap. Talk about balls....
Lula is talking about trying it again, btw -- ''new, improved'' version, dontchaknow. Yah, right.
Sigh. The problem is, so many people see "transaction" and they think that means "retail sales transaction". So this proposal becomes "instant tiny sales tax - what could be wrong with that?"
It's hard to explain that "transaction" also means, say, "Swiss Re transfers $41 million to a bank account in Dallas for 24 hours" or something like that. And it's even harder to explain that it's now more important to the American economy that this kind of transaction take place smoothly, than that anybody in America makes tires or steel or textiles.
Real title: How to Return to a Cash Economy!
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