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Nicolas Sarkozy Joins AFL-CIO In Demanding Tobin Tax For All Financial Institutions
According to the BBC, the issue of the Tobin Tax, which as we reported previously, had garnered some vocal proponents recently, but was never expected to be anything than mere discussion points, has gotten a firm G-20 supporter in the face of French president Nicolas Sasrkozy. And while the opposition of the US is a certainty, the recent overtures by FSA Chairman Adair Turner in which he announced he would consider a Tobin tax implementation, means the US could be all alone in its disapproval of this form of taxation.
Recently many talking heads have come out and discussed how much of an adverse impact a Tobin Tax would have on the US economy, yet the simple fact is that the majority of retail investors already pay substantial transaction fees to their brokers and would not notice a theoretical 0.1% transaction tax increase in fees. Furthermore, brokerages which are now enjoying record speculative mania, could easily lower their fees to compesnate for any new trade taxation. This leaves only big institutions, and specifically those that traffic in either HFT, churning, painting the tape, or all three, as adversely impacted by a tax. Yet it is these very same entities that are benefitting from a record steep yield curve: an ongoing boon compliments of the US taxpayer. In essence: when firms get a gift from the Federal Reserve, they will take it no questions asked, yet when there is even the slightest hint of a proposition introduced that could take away even some of these profits generated courtesy of taxing the general population, which is what QE is, everyone screams bloody murder.
One (and by one, one, of course, means Goldman Sachs and other HFT titans) can only hope that the AFL-CIO and US democrats do not get much more involved in this issue. As we reported previously, the Tobin tax issue could quickly turn ugly as instead of a purely economic issue, it would start having political overtones. It is a well known feature of government that it will sniff out any segment of the economy that is abnormally profitable, and quickly seek to tax this excess profitability out of it - if you throw in the ethical considerations against HFT, and the purported strong opposition of the US against Tobin Tax could quickly dissolve.
From the BBC:
The move is aimed at cutting excessively speculative trades and encouraging long-term decision-making.
But senior EU officials told the BBC that the chances of getting a global agreement were "less than minimal".
The
proposal does not yet have the formal backing of the EU or Germany -
France's largest trading partner - and according to the BBC's business
reporter Joe Lynam, it is widely expected to face resistance from
Britain and the US, home to the world's largest financial centres.
Yet here is why the work of HFT operators will likely continue unimpeded (until such time as we have yet another market crash, likely exacerbated by these same players):
According to our correspondent, the notion of a Tobin Tax is likely
to be referred by the G20 to the Financial Stability Forum - the club
of the world's top central bankers and financial regulators - to assess
and translate into a workable set of rules to which all countries might
be able to agree.
But its proponents face a tough battle.
Speaking
in Brussels last Thursday, British Prime Minister Gordon Brown voiced
doubts about whether a worldwide tax was practical.
"If one or
two countries refuse to adopt a common levy or action or taxation, then
it makes it very difficult to implement," he said.
"If flows
are under supervision in one set of countries, but not under
supervision in other countries, then it makes it easy for people to
avoid the action that even is agreed by most of the countries in the
world."
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When where the French Against ANY tax whotsoever ??
sarkozy can plaster his mouth and asshole with
superglue so that he can explode into a blaze
of flaming bullshit...
I just say: http://www.StopTobin.com
Something putrid wafting in from Turtle Bay.
Me thinks some global gasbags in need of tax revenue from cross border musical fruit trade.
Maybe most polite folks won't notice the theoretical 0.1% flatulence increase building up in the distended fart pillows.
But, eventually all stink bombs get lit by obstreperous little children in search of relief from ambitions of global dominance.
Global economy is working on it's treasury and legitimization.
Sure it's wrong. Sure it's corrupt, but it wants to share.
A quick google search finds that back in 1995 Fidelity investments traded roughly $1.5 Billion in stock every day.
http://articles.latimes.com/1995-06-25/business/fi-17075_1_fidelity-fund
If anyone can find a recent estimate of how many shares they trade per day I'd love to see it. Today, that number could easily be 10 times that. But even if its just $10 Billion of stock per day, that would be $10 Million in taxes they would pay each day. This would come directly out of mom and pop mutual fund investors' pockets. GREAT FUCKING IDEA!
This is just the typical French finger in the eye of the idiot American leadership (or lack there of).
The French like to open with the eye jab just Bernanke likes to open his testimony with a smirk on his face.
Gets the other side all bent out of shape and failing to think rationally... works every time. Kind of like shouting "Death Panel!"
Great, so the government will now get direct vig off the HFT? Sounds like a solution to me.
Can't we just stop bailing them out to the extent they go beyond 10% reserve requirements?
Allowing bad behavior and then tax it is dramatically less preferable to simply preventing the bad behavior, IMO.
This would happen in U.S. when hell freezes over and pigs fly.
1. No more hedge funds
2. No more buying/selling by mutual funds once/year
3. Everyone's 401K drops by at least 10% (due to taxes) by retirement.
Why even WASTE TIME talking about this bullshit tax.
You're way, way off in stating this wouldn't impact individual investors and discount brokers. Maybe you were being sarcastic there, and I couldn't pick that up properly?
Anyway run numbers on some simple, realistic in and outs for a retail trader who trades even just 3-5 times per week, let alone the people doing real day trading, and you'll see.
Some discount brokers would go out of business overnight. That won't help an already jobless recovery.
A 0.1% tax would certainly kill every discount broker. The $10 trade becomes the $100 trade. 90% of trading would stop. I'd give this tax a 0% chance of passing. More likely we'll see a VAT.
I like the idea of charging a tobin tax at the time of sale based on how long one has held the security and the lower of the buy or sell price.
The longer held, the lower the tax, the quicker flipped, the higher the tax.
I like the idea of charging a tobin tax at the time of sale based on how long one has held the security and the lower of the buy or sell price.
The longer held, the lower the tax, the quicker flipped, the higher the tax.
Mr. Durden,
It would be nice to have a pseudonym attached to every comment. Do you have enough members yet?
River
I transacted on $45,000 worth of stocks and options today, so let me understand what's being proposed:
Under the porposed scheme, I invest $45,000 and pay 0.1% or 1/10 of 1% tax. Hmmm, on $45,000 that costs me, $45. And what is it I receive back for my $45? Zippo, Zilch, Nada.
If I am lucky enough to make $1,500 in the next 60 days on this trade (set for Nov OpEx), I'll have $46,500 on which I'll pay another $46.50 in "Tobin" tax when the options execute.
Then, I'll pay 25% in Cap Gains on the full $1,500 or $300.
So, I pay $391.50 in taxes.
But if I lose $1,500 on the trade, I still pay $45 + $43.50 in taxes, or $88.
Sounds to me like USA wants to tax us even when we lose $$.
Basically, this is a scheme to cheat us out of our accumulated Capital Loss deductions.
With my '07 and '08 Capital Loss carryovers, I don't pay tax on the $300, so they are looking for a scheme to tax me somehow.
They are evil, crazy SOB's.
"This leaves only big institutions, and specifically those that traffic in either HFT, churning, painting the tape, or all three, as adversely impacted by a tax."
Do you even trade, man?
"the Tobin tax issue could quickly turn ugly as instead of a purely economic issue, it would start having political overtones."
Gee, you think? Of course it was never "purely economic"!
-- Jason Ruspini
I trade for a living. I am one of the guys that are there to buy the stock when a seller decides he needs to get out as he is losing his shirt. If there are no people like myself providing this liquidity, stocks will just continue to fall when the become out of favor, talk about losses. Because of this, I see people like us as providing a valuable service for the average investor. Many articles I have read claim that the "Robot Traders" with their computerized algorithyms are to blame for as much as 30% of trading volumes at this point and increasing exponentially. These robots are unfair competition to the human trader, and are responsible for much of the "noise" in the markets nowadays. I say that that should be the target of any tax that would be levied.....Tax any execution that is generated by one of these machines. That should help level the playing field and curb this destructive use of technology. Lets face it, traders are necessary to provide much needed and valuable liquidity to the markets....just not the robot type. Incidentally, it is the very large players with deep pockets that are employing these Robots, go figure. I wonder if they were paid for by our money.
Another issue with this Tobin tax is that if even one country doesn't adopt it, they will be inodated by start-ups from the big players who can play the game on an international basis leaving us small scale investors and traders alike to pay the tax, making it even more unfair. Leave the little guy alone and address the issues that are truly at the root of the problems in the markets today.
Tax only the Robots!