Where the Money Is (NYT columnist wants transaction tax on stocks)

New York Times ^ | January 13, 2009 | Bob Herbert

[reaganaut1]

...

The economist Dean Baker is a strong advocate of a financial transactions tax. This would impose a small fee — ranging up to, say, 0.25 percent — on the sale or transfer of stocks, bonds and other financial assets, including the seemingly endless variety of exotic financial instruments that have been in the news so much lately.

According to Mr. Baker, the co-director of the Center for Economic and Policy Research in Washington, the fees would raise a ton of money, perhaps $100 billion or more annually — money that the government sorely needs.

But there’s another intriguing element to the proposal. While the fees would be a trivial expense for what the general public tends to think of as ordinary traders — people investing in stocks, bonds or other assets for some reasonable period of time — they would amount to a much heavier lift for speculators, the folks who bring a manic quality to the markets, who treat it like a casino.

“It raises money in a way that comes primarily at the expense of speculation,” said Mr. Baker. “The fees would be a considerable expense for someone who is buying futures, or a stock, or any asset at 2 o’clock and then selling it at 3. The more you trade, the more you pay.

“For the typical person holding stock, who is planning to hold it for a long period of time, paying the quarter of one percent on a trade is just not that big a deal.”

The fees, though small, could amount to a big deal for speculators because in addition to the volume of their trades they often make their money on very small margins.

[reaganaut1]

A transfer tax would drive trading overseas and reduce liquidity and asset prices. Short term capital gains are already taxed at the same rate as ordinary income, and income tax rates will be rising under Obama. There already fees on trades in stocks and futures to fund the SEC and CFTC.

If a transfer tax of 0.25% is introduced, I bet it won't stay at that level.

[agere_contra]

Bring it on! London isn’t going to turn away the new business.

[SumProVita]

let me guess...Dan Baler is a liberal Democrat....right?

[SumProVita]

Make the above Dean Baker (just starting first cup of coffee).

[NTHockey]

Please, let’s tax everything - income, savings, wealth, virtues, vices and anything else you can think of. Then nobody will work./s

[Boiling Pots]

Money the government “sorely needs?”

Is he serious?

The Government does not have a revenue problem, in fact, they rake in more revenue than anybody else, by far. They have a SPENDING problem.

[jedi150]

$100 billion or more annually — money that the government sorely needs.

To fund the next bailout????????????????????

[Travis T. OJustice]

money that the government sorely needs.

The government needs LESS money, and should cut expenses rather than continuing to screw US productivity and wealth creation.

[NeoConfederate]

Why not have a transaction tax on movie tickets? Hollywood libs would love to contribute more of their money to Uncle Sugar, wouldn’t they?

[jr.ewing.78]

Money the government “sorely needs?” Is he serious? The Government does not have a revenue problem, in fact, they rake in more revenue than anybody else, by far. They have a SPENDING problem.

------------------------

RIGHT ON. Why is the narrative always framed as being that the spending is untouchable? I wish my wife and I could issue bonds for less than 1% to fund our next vacation and all of our Christmas gifts, no?

[E. Pluribus Unum]

All money rightly belongs to the government.

They are just kind enough to let us have a little of it.

[Mark was here]

We belong to the government. Try selling your organs. You will find the actual owner refuses to sell them. When our Founding Fathers devised our system of self-government little did they know they would be transferring title to their very bodies to the state. Point is if they own our bodies, they certainly own our money.

[KarlInOhio]

A lot of those transfers he expects to get $100 billion from will either move overseas or will just cease to exist. If you are making trades based on 0.1% differences in price between locations or over a day, but have to pay 0.25% tax on it, you just won't make the trade. The $40 trillion tax base they expect to tax will fade to a mere fraction of that. And like most taxers, they will expect the $100 billion is theirs by right and have already spent it, so they will have to jack up the tax rate in order to get the money.

[chuck_the_tv_out]

they call it “stamp duty” in england. it’s a total buzzkill. you can’t make any money

[E. Pluribus Unum]

All those rich white people who actually save and invest their money instead of spending every last dime as soon as they get it need to be punished.

[samtheman]

Does London have online brokers? Can an American get an account?

[Mr. Lucky]

You’re just bitter.

[Night Hides Not]

Bring it on! London isn’t going to turn away the new business.

Thanks to Sarbanes-Oxley, London is now the financial capital of the world.

[an amused spectator]

Obama:	Well, there's egg and bacon; egg sausage and bacon; egg and tax; egg bacon and tax; egg bacon sausage and tax; tax bacon sausage and tax; tax egg tax tax bacon and tax; tax sausage tax tax bacon tax tomato and tax;
New York Times:	tax tax tax tax...
Obama:	...tax tax tax egg and tax; tax tax tax tax tax tax baked beans tax tax tax...
New York Times:	tax! Lovely tax! Lovely tax!
Obama:	...or Lobster Thermidor a Crevette with a mornay sauce served in a Provencale manner with shallots and aubergines garnished with truffle pate, brandy and with a fried egg on top and tax.
Wife:	Have you got anything without tax?
Obama:	Well, there's tax egg sausage and tax, that's not got much tax in it.
Wife:	I don't want ANY tax!
Man:	Why can't she have egg bacon tax and sausage?
Wife:	THAT'S got tax in it!
Man:	Hasn't got as much tax in it as tax egg sausage and tax, has it?
New York Times:	tax tax tax tax... (Crescendo through next few lines...)
Wife:	Could you do the egg bacon tax and sausage without the tax then?
Obama:	Urgghh!
Wife:	What do you mean 'Urgghh'? I don't like tax!
New York Times:	Lovely tax! Wonderful tax!
Obama:	Shut up!
New York Times:	Lovely tax! Wonderful tax!

[lwd]

I thought there was a law against taxing the same money twice.

[andy58-in-nh]

Liberals absolutely, positively refuse to believe that taxes affect behavior. No matter how high you pile the evidence, no matter how carefully you explain the facts and logic of money and markets, they cling bitterly to their left-wing religion, sticking their fingers in their ears, refusing to hear anything but the sweet siren song of Socialism.

But for those of you who are not so inclined, here's the nub of the matter: all wealth is fungible. Even most fixed assets can be sold and liquidated with relative ease, for the right price. Cash and securities are traded worldwide, instantaneously, electronically, frequently in countries whose securities laws make more sense than ours presently do.

If forced to trade in the US market, traders will make fewer, larger transactions rather than several smaller ones. But because US markets will be put at a competitive disadvantage, cash flow and velocity will decrease and more financial service jobs will be lost to foreign countries. All because grasping political hacks can't keep their sticky fingers out of our pockets. And because we let them.

[andy58-in-nh]

Very clever! ;-)

[reaganaut1]

Liberals absolutely, positively refuse to believe that taxes affect behavior.

Not really, since they advocate carbon taxes to reduce emissions and cigarette taxes to cut smoking. What they refuse to believe is that higher income taxes cause people to work less .

[andy58-in-nh]

I thought there was a law against taxing the same money twice.

Dividends and capital gains are taxed twice. Corporations pay dividends to investors out of after-tax profits, yet these dollars are then subject to personal income tax paid by the individuals who receive them. The same goes for capital gains distributions, but individuals currently pay a lower tax rate on long-term capital gains, and can (to a limited extent) write off losses against other gains.

Of course, Barack Obama wants to change this favorable situation. In any event, the US now has the 2nd-highest effective tax on dividends in the developed world, and our treatment of capital gains discourages investment and capital formation.

Which is why London and not New York is now the financial capital of the world. So of course, Washington liberals propose to tax us more.

[Leftism is Mentally Deranged]

The left hates capitalism, and the stock market is the main symbol of capitalism.

[andy58-in-nh]

Not really, since they advocate carbon taxes to reduce emissions and cigarette taxes to cut smoking. What they refuse to believe is that higher income taxes cause people to work less .

Ah - but Liberals use taxes to affect behavior in ways they desire, regardless of how people behave in reality. Carbon taxes will not directly reduce emissions - they will instead reduce productivity and shift capital to more profitable uses, regardless of how much "pollution" is produced, or jobs lost.

Cigarette taxes may have had a marginal effect on smoking rates, but broad public awareness of the dangers of cigarettes has undoubtedly had a greater effect. For people who continue to smoke - they have options. Check the parking lot in any border-town shopping mall where such conditions exist.

I'll give you an example from my neck of the woods. Massachusetts has a cigarette tax of $1.51 per pack. Maine's tax is $2.00 a pack. Both states also have a 5% sales tax. In my state of New Hampshire, the cigarette tax is $1.08 and there is no sales tax. Salem, NH is right across the Mass. border. Portsmouth, NH is just across the bridge from Maine. Guess which license plates predominate in those towns' shopping centers, especially in the stores that sell cartons of cigarettes? Massachusetts also has a high excise tax on distilled spirits. Our state liquor stores in NH are packed full of Mass. shoppers all the time.

[Libertarian444]

...including the seemingly endless variety of exotic financial instruments that have been in the news so much lately.

In other words, we don't care if you rip people off, just make sure the government gets it's cut.

[wastoute]

LOL See article below “Ayn Rand-Atlas Shrugged, Novel or Prophecy?” LMAO