Securities Transaction Tax: Wrong Idea at the Wrong Time

In an Op-Ed column in this morning's New York Times, columnist Bob Herbert proposes a 0.25% transaction tax on all securities transactions. Mr. Herbert writes that, "the fees would raise a ton of money, perhaps $100 billion or more annually." And exactly where would all that money come from? Who cares, right? Mr Herbert goes on to say that while the expense would be trivial for individual investors, they could "amount to a big deal for speculators."

Once again, it all comes down to the evil speculators. Without even getting into why the majority of this tax burden would end up being borne by the general public, do we really want to put regulations into place that discourage any of the remaining liquidity in our financial markets?

Comments

[Robert Wein...:]

Your right on the money.

Only people who want to prove they no nothing about the markets would suggest such a thing.

The fool probably based his math on current trading volume which would significantly dry up.

Jan 13 10:07 AM

[Copperman:]

Just what we need to replenish the tax and spender's oasis, a transaction fee. Indeed, Uncle Sam want's to tax your gains which then yields less $$$ to reinvest. Oh and if you keep your gain to live on, the state and local communities take more of the gain thru income, property, and sales taxes.
And, never forget that flooding the market with new money from Uncle is inflationary - zippo - and your money burried under a rock is worth less. Be sure that more money taxed more and inflated is really a shell game - more equals less.

Jan 13 11:59 AM

[sr9web:]

Not only is the columist Hebert completly and utterly venal in his thinking, but he's also incredibly stupid.

The only thing a "transaction" tax on securities would accomplish is forcing the so-called speculators to drive the markets to more volatility, not less.

If a tax of "X" is applied, then each trade must make "X" + profit or it will not be entered into.

When you add the "X" to each move, the moves will be larger, up or down.

Also, this idea is absurd on its face - think about this:

In addition to stock trading on my own, I am in several mutual funds. Sometimes a fund might have a turnover ratio of over 100% - that means the entire portfolio is bought and sold at least 1 times per year.

Now comes along this idiot Hebert who wants to TAX MY MONEY .25% each way.

Oh great!

It's not enough that my funds can sometimes go down 40% in just a few months (like they just did) - but now Hebert wants to take another .5% (.25 +.25) of my money.

The man is clearly deranged and an enemy of personal financial freedom.

Jan 13 05:15 PM

[sr9web:]

Also, it's infuriating that the Times would even publish such vindictive buffoonery.

I look forward to the day that the New York Times goes out of business...

Jan 13 05:18 PM

[sr9web:]

One final note:

A tax of this type would cause a complete and total collapse of the stock market.

If the total market is worth say $1000 Billion, and is transacted on avg 1 times per year, then collaping the market value to $10 Billion would naturally cut out 99% of the transaction tax.

The more I think about it, the more I am guessing that this Hebert is helping to advance straw dog trial balloons for some ulterior reason.

No person could be so stupid as Herbert appears to be.

The positing of such an absurd and demented idea can't be done by a sane person, so if Hebert is not insane - he's got ulterior motives.

Jan 13 05:26 PM

[Alan Brochs...:]

I missed the original comment, so thanks for pointing it out. As we face massive budget deficits in coming years along with an increase in populism, expect to see lots of back-door and hidden taxes pop up. They could justify this one as a means to get people to stop selling (though we know that is a ridiculous conclusion ultimately). I actually expect to see a small selling tax on stocks. First, though, they will rip out the FICA cap. These tax-the-rich measures are likely to be counterproductive in the long-run to the economy, but they will satisfy short-term needs and political perceptions.

Jan 14 09:20 AM