Posted on 03/03/2010 5:07:43 PM PST by SmokingJoe
The reckless behavior of a severely bloated financial sector has given us the worst downturn in 70 years. Let's do something about it. Let's put a tax on hyperactive traders.
A financial transactions tax can be an effective tool for downsizing the sector and restoring it to its proper role in the economy so this sort of calamity does not happen again. The idea is to place a small tax on financial transactions to discourage speculation without hampering productive investment. Bills recently introduced in the House by Peter Defazio and in the Senate by Tom Harkin call for a 0.125% tax on each side of a stock purchase, with comparable rates on trades of other financial instruments like options and credit default swaps.
Computerization has brought transaction costs down sharply over the last three decades. Therefore this tax would be pushing trading costs only back to where they were in the 1980s and early 1990s. Both bills have exemptions for trades carried through by pension funds and other tax-sheltered accounts, ensuring that the overwhelming majority of small investors and people saving for retirement will be virtually unaffected by the tax.
Such a tax could raise close to $100 billion a year, depending on the extent to which trading declines in response to higher transaction costs. This money could be used to rebuild infrastructure, reduce other taxes and/or reduce the deficit. The revenue would come largely at the expense of excessive trading in the financial sector. This would yield two benefits: The tax would raise revenue and reduce the volume of speculative trading, which serves no productive purpose. Does rapid-fire trading create jobs or build the nation's capital? I doubt it.
(Excerpt) Read more at forbes.com ...
I need money. Maybe I can get a cut. There is a new book conming out that I hope to get. Called “Econned” by Yves Smith. First, I have to read Sarah Palin’s book, I promised my mom.
parsy, who hopes it ain’t too bad....
I need money. Maybe I can get a cut. There is a new book conming out that I hope to get. Called “Econned” by Yves Smith. First, I have to read Sarah Palin’s book, I promised my mom.
parsy, who hopes it ain’t too bad....
Yep, pensions too. Should’ve included that along with 401k plans. State pensions have been particularly wacky, chasing a high rate of return with no apparent understanding of risk. CalPERS springs immediately to mind.
Also this would be agreat way to tax Roth IRA’s and 401k’s which are accumulating large amounts of capital -tax free</I>
Is this guy being paid by the London, Hong Kong and Tokyo brokers to make sure they become the centers of finance in the world markets ?
Stock trades are already taxed in London.
Found this little tidbit at Market Ticker, today on Deflation:
http://market-ticker.denninger.net/archives/2035-Its-Called-DEFLATION-Folks.html
Finance in all it’s forms, whether banking or insurance - produces nothing either. Every dollar of such “activity” comes about only as a parasitic drain on production. It cannot be otherwise. Further, speculative activity in all of its forms produces losers in exact proportion to winners - if Goldman makes $100 million speculating on oil prices, someone else loses the same $100 million. The net benefit to our nation’s economy? Zero - we merely moved money from one hand to another.
parsy
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