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CNN: After the GameStop fiasco, momentum builds for a Financial Transaction Tax that would generate $777 billion
- Thread starter Saucycarpdog
- Start date
A speculator tax has been thrown around for a while and this is actually a pretty low stakes version of some proposals I've seen before. And as the article points out, upper incomes would be affected much more.
Still, eliminating the carried interest tax break should be at the top of any "stick it to Wall Street" conversation.
Still, eliminating the carried interest tax break should be at the top of any "stick it to Wall Street" conversation.
Because it doesn't actually address the underlying issue. As you say a $20 tax is nothing on $20k, so why would it stop someone from doing it? The institutions if they make a loss on a trade can claim it back and retail investors just add it as a cost to their capital gains. It doesn't prevent the trades from happening or even enter the calculation in such a trade.
FTT done properly should be instituted on businesses only and not individuals. Want to try and stabilize the market, implement taxes on short positions that are over an excessive value. GME happened because it was shorted more than shares that actually existed, you don't get to that point without massive institutional investment.
A trade's a trade, no matter who's doing it, I have zero problem with taxing all of them.
They're already taxed. But again, the argument that this will prevent a GME scenario from happening is flat-out misguided. If you want to say that it should be taxed to generate additional government revenue, that is another issue entirely.
A trade tax isn't going to stop people piling in when they think they'll 10x their investment in a couple of weeks because they've identified an over-shorted stock. Maybe try addressing the billions of dollars in contracts that led to the situation in the first place. As for addressing HFT, retail investors aren't exploiting momentum for pennies per share which any tax like this should be addressing.
Or maybe we should impose taxes and have money for the poor, like we are doing in this case.
How is this not making money from the rich? The top 1% will pay 40% of the transaction taxes. The bottom 60% will pay only 11%, which translates to the top 40% paying 89% of this transaction tax.
And if you can afford to put money into the market, then you can afford to pay .001 cents for every 1 dollar transaction. How are you becoming poorer from that?
If anything, if you buy and hold your stocks, you will be fine. If you're a day trader, than that means you are not poor to begin with and have disposable income.
I'm not pitching FTT as a solution to a GME scenario. I just think it puts an end to HFT and also begins to suck money out of what are functionally casinos, creating an opportunity for that money to be used for actually productive purposes.
It's not even close to the extent of what needs to be done to the financial markets, but it's useful.
Should you pay .001 per deposit or withdrawal you hold in your bank account given interest rates are well below inflation?
The article in the OP is trying to attach it to GME stupidly, but there is nothing in these plans -- that have been talked about for over a decade, and to which the article itself pulled the data from a 2018 scoring of the revenue impact -- that is interested in preventing a GME scenario.
The article itself doesn't even draw the conclusion that this is even remotely involved with preventing a GME scenario... I'm not sure where this rabbit hole came from. Its solely a "generate additional government revenue" that the author at CNN tried to somehow weave in to GME and Robinhood
I still think having LT capital gains be taxed as income over a certain level is a much better idea than just levying a transaction fee.
It won't put an end to HFT, it just changes the algorithm.
Are you suggesting that the market return rates are below inflation right now?
And if that money is used to help the poor, then I have no issue with it. .001 cents for every $1,000 transaction I do is chump change for me. That's not going to metaphorically break the bank for my account.
Plus, the transaction fee would not hurt poor people because they have no money in the first place to even put into the market. So your bank metaphor doesn't work in this case.
?????????????? You think conservatives are proposing this????????????????
Or is this comment a bit?
I'll be honest I didn't actually read the entire article, I was just responding more to the gamestop sentiment.
The argument that throwing a transaction tax is anything other than trying to syphon some of the money from the market is erroneous. As you say, addressing longer term capital gains is the better option if you're actually trying to address the wealthy.
Excluding HFT, poorer retail investors are more likely to trade more frequently because they have less available cash, that means they need to make more trades to address to grow their portfolio. Is it better that someone who can only afford 10 shares at a time pays more transaction fees than someone who can buy 1000 shares at a time? In the end the capital gains would remain the same but the person buying 10 shares to build that position would have paid more with all other things remaining equal.
The explosion of free transaction trading actually empowered retail investors, this even though minuscule, leans more back to maintaining status quo IMO.
Market return rates have implied risk, your bank account doesn't, stocks don't only go up as hard as it may be to believe. People in the market with less cash are more likely to have to execute more transactions than people who are wealthy relative to their overall portfolio, they're also more likely to panic sell or not have hedged positions.
Plenty of "poor" people have money in the market right now, in fact moreso than ever.
Does someone have a link to an explanation as to why this is bad? I know it would impact liquidity, but what does that actually mean. Many bigger investors like Blackrock move slowly, so I don't see this impacting them.
I do agree fixing the gains tax would probably be better, but if thats not feasible, why not a use tax.
Earnest questions, my stock market knowledge is probably 101 or 201 level.
I do agree fixing the gains tax would probably be better, but if thats not feasible, why not a use tax.
Earnest questions, my stock market knowledge is probably 101 or 201 level.
Unless they're exempting HFT firms somehow the tax would hit them the hardest.
Maybe learn the political alignements of the people for or against this policy and come back better informed.
yes but rarely fees on trades anymore. Tax is generated on income just as it would from any other source. You can write off 3k a year (for 4 years if it goes beyond that i believe) for short term tax losses (held for less than a year). I'm sure institutions have loopholes galore for that htough
I like how the moment a handful of filthy doors make some change they basically overnight express sweeping legislation.
I wanna quote this bit again because I think it's the most interesting bit in the article that's actually related to GME and because my Google skills are failing me. I'm struggling to find out exactly how much the SEC budget increased because of this tax (and GME trading) that caused them to reduce the input by 75 percent this quickly.
It's invisible and they must have gotten enough money in this short window to completely fund the operation for the remainder of the year plus some at least. Right? This section keeps nagging me and its screwing up my work day. Lol.
So implement a tax for same day transactions on the same stock. We already track that stuff similarly with wash sales.
Something like 90% of day traders don't outperform the general market. Algorithm traders will just include the tax in their calculation. People constantly buying and building their position in the same company, will pay the tax. It may be a good revenue stream for the government but it really doesn't address any fundamental issues that need solving.
No.
Yup. How long has it taken for these "1400" checks to get out to us?
Some poor make money off this and they get the legislation ready to go to protect the poor little hedge fund.
You're the one asking "what do political alignments have to do with a policy proposal?"
Get the fuck outta here.
The entire premise of the article is flawed but let's just table the idea that the Gamestop frenzy warrants a new tax. taxing per $1000 a person spends isn't going to affect the average American. If you have a 401k, life insurance or a private retirement plan the effect will be low. This tax will basically hurt the majority of hedgefunds because they aren't as great at gaming the market as simply putting money into ETF would be.
While I don't think there should even be a stock market gambling system at all, anytime I hear about a flat fee/tax/cost being associated to something across the board in order to generate revenue, I always think of how toll roads are essentially luxury fast lanes for the rich, because they can afford EZ tags etc. and poor people can't. If you live in Conroe and work in Houston city being in the toll lane is (potentially) a huge difference in travel time and ease than if you're roughing it in the normal lanes with everyone else. That and the fast lanes are for the most part better maintained and safer, so there's long term cost benefits as far as maintenance too.
A 0.1% tax on transactions isn't going to hurt the rich or hedge funds as much as it will lower/middle class people trying to gain some financial security. Not that the point is to inflict pain necessarily, but I always try to look at things in terms of Harm vs Help. And don't get me wrong, I am aaaaaaaaaall about finding ways to siphon money from the rich and get it back into the government to go toward good causes and helping even things out, but it's hard not to be skeptical.
Interesting. I can see the utility in investing in businesses/ideas and pooling money together to make them happen, so I guess when I say I am against the stock market I'm talking about trading. The kind of folks you're describing.
EDIT: Well now the post above mine has me confused. Who's this going to hurt?
A 0.1% tax on transactions isn't going to hurt the rich or hedge funds as much as it will lower/middle class people trying to gain some financial security. Not that the point is to inflict pain necessarily, but I always try to look at things in terms of Harm vs Help. And don't get me wrong, I am aaaaaaaaaall about finding ways to siphon money from the rich and get it back into the government to go toward good causes and helping even things out, but it's hard not to be skeptical.
Interesting. I can see the utility in investing in businesses/ideas and pooling money together to make them happen, so I guess when I say I am against the stock market I'm talking about trading. The kind of folks you're describing.
EDIT: Well now the post above mine has me confused. Who's this going to hurt?
"Finanztransaktionssteuer" is the german word for it and I think it is beautiful.
I think it is a good first step, although I think in the long term we need a value chain relative taxation, which is essentially a data-driven approach to taxation that looks at the productivity of value chains first and foremost.
Taxation needs to take into account that levels of exploitation of either human labor or natural resources lead to value creation.
The higher it is, the less justified it is for this created value to remain in private pockets.
This is like the next level of progressive taxation.
I think it is a good first step, although I think in the long term we need a value chain relative taxation, which is essentially a data-driven approach to taxation that looks at the productivity of value chains first and foremost.
Taxation needs to take into account that levels of exploitation of either human labor or natural resources lead to value creation.
The higher it is, the less justified it is for this created value to remain in private pockets.
This is like the next level of progressive taxation.
I really wish more people would read this. As usual, the Albatross is dropping the truth.
Just tax the rich or increase capital gains on these people.
Don't fucking put more taxes onto me.
This doesn't address the core issue behind the GME issue. Naked shorting, hedge funds colluding, etc. Not sure I welcome this. They should at least graduate the tax so higher value players pay more. I see this screwing the smaller investors.
I don't understand how anyone can look at the entire fiasco that happened with the GME stocks and Robin Hood and think that the top priority from all of this is a tax on trading. There are a dozen different problems on multiple levels and not one of them was "the government didn't get a fair cut."
I get that taxes need to go up but anything that isn't progressive in nature and increasing in line with wealth is fundamentally flawed and essentially a half measure at best.
I get that taxes need to go up but anything that isn't progressive in nature and increasing in line with wealth is fundamentally flawed and essentially a half measure at best.
This tax seems way too low to actually do any damage to small-time investors. I really have a hard time seeing how this effects anyone other than HFT, which is about as far away from "small-time" as it gets.
I feel like a lot of people are seeing the framing from the article headline as trying to tie this to GME and based their reactions around that.