Trading Tax – Bloomberg
By Barry Ritholtz - March 9th, 2009, 1:15PM
A proposed tax on stock trades could help pay for Wall Street’s bailout. (taking Stock)
Bloomberg, March 07, 2009
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
March 9th, 2009 at 2:53 pm
Question….he says although the impact of the tax to the small trader wouldn’t be all that significant, it would be to the large traders and because of the tax, they would leave the market……and go where????? If this would have some impact on big traders, who probably swing the market a lot, I don’t see where the big harm is. What am I missing?
March 9th, 2009 at 3:13 pm
That’s a stupid idea. What happens when the large institutional traders instead of making lots of transactions per day make only a few per day to minimize their tax liabilities? I would think market volatility would be drastically affected by a lower quantity of larger trades rather than a large quantity of lower trades.
*I admit I did’t see the vid, the joys of work web filtering.
March 9th, 2009 at 5:23 pm
deanscamaro,
As a day trader it would put me out of business over night. that .025% is on the value of each transaction, so you pay a .5% on a round trip on the total value. That means if I buy 1000 shares of a $50 stock I have to pay $125 to buy it just in tax. Then let’s say I sell it at break-even. I then have to pay another $125 to sell it. I often make less than that on a transaction and then I have to pay exchange fees and commissions to. Many of the black box hedge funds trade this way also. So, much of the people and or retirement funds that use these funds will see not only reduced returns but additional fees.
Putting a transaction tax affects main street. The one’s that got us in this mess were the regulators, the rating agencies, the quants that came up with derivatives, and the legislators who bought votes from the poor to get them 100% financing on homes, and the Henry Paulson’s who sold them. Securities trading had absolutely nothing to do with the parts of the businesses that got us in that mess. Where will the securities go to be traded, where many went…to foreign exchanges. They’ll register as ADRs and say adios.
It will also raise the barriers for companies to raise money in the public markets because investors will have to calculate a much higher rate of return to overcome these fees, thus raising the costs to companies who need the money to invest in their businesses. This legislation is being sponsored by legislators who have no understanding of the markets. It makes for a great sales line “Let Wall Street Pay” It’s about as accurate as the “Stimulus Bill” What utter taurine excrement!
March 9th, 2009 at 6:37 pm
If this goes through wave goodbye to liquidity in the markets.
March 10th, 2009 at 10:53 am
I am a small time futures trader. This would put me out of business. The March emini S&P is currently trading around 700. The value of the contract is $50 per point or $35,000. If I do a single round turn per day (buy 1 contract and sell 1 contract) it will cost me $175 in “trader tax”. If I do this once per day and say there are approx 200 trading days in the year, then I will pay $35,000 in trader tax.
I play by the rules and trade in a regulated market. I guess I never realized I caused all of Wall Street’s problems – sorry everyone!