Congress Still Looking at a Stock Trading Tax

As I have noted in several earlier posts, Congress is looking to place a tax on stock trades. They have not given up on this trading tax as noted by the below screen shot from my Site Meter account.

(Click to enlarge)

Comments

[Angry Banker:]

A nominal tax of 0.1%~0.25% per trade (depending on size) would be absolutely immaterial and meaningless for any investor. But the upside for the government (and therefore the average taxpayer) would be HUGE. Even though an ardent capitalist, I still say go for it.

Oct 25 06:28 AM

[Brad Castro:]

A-holes.

Oct 25 09:38 AM

[Brad Castro:]

Follow up - Two Mark Twain quotes:

"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself."

"All Congresses and Parliaments have a kindly feeling for idiots, and a compassion for them, on account of personal experience and heredity."

Oct 25 09:42 AM

[Egg:]

A 10-25 basis point tax on every trade would destroy daytraders and swing traders alike. Especially the higher tax. (And then double that since you would have to presumably pay when you buy and sell.) Not to mention you pay the tax on even losing trades.

Online brokerages would be gutted also with the drop in volume.

My guess is Congress will never pay such a debilitating law, at least not now. But it will stay in the hopper and one day when the federal government has its own California-esque fiscal panic/crisis (it will happen) then everything is on the table. That's when we will have a trading tax.

Oct 25 01:52 PM

[Taxprey:]

Attention long-term investors. The stock / securities / financial / derivatives 'trading tax' will cost you far more than the tax itself. Proponents of the tax believe it will reduce the financial sector and trading to 1980 levels. Today the spread is one or two cents because of more trading and liquidity. The average spread in 1986 was $0.53, that would be a 2% loss on each buy or sell. Brokerages will fail, competition will fall and fees will rise. Reduced compounding is the greatest loss. Expect gains to be reduced by one third to one half over a lifetime.

10-14-09: Taiwan tax commission, for example, wants to introduce for a 3rd time a stock transaction tax, I guess because it failed so well the first two times. 1973 was the first time they introduced the tax, result: the market fell 63% within a year. In 1988 they reintroduced the tax for a second time, result: 19 consecutive losing days, down 43% in less than 3 months. Source: taiwannews.com.tw

The Independent Budget Office of New York City considered a much smaller transaction tax on just the NYSE and AMEX exchanges and they found it would result in Net Negative Revenue, with hundreds of thousands of jobs lost, most not even related to finance. Millions of jobs would be lost if all US exchanges were taxed. And many more negatives.

Nov 04 01:50 PM