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Financial transactions tax

Ikari

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Ikari

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I looked at the math of transactions taxes in the 1990s. They didn't really make sense then. Why should they be better now?

it's just derivative gain. You need a bit of D in the PID to properly servo a system.
 

Thoreau72

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I looked at the math of transactions taxes in the 1990s. They didn't really make sense then. Why should they be better now?

Because details have changed in 25 years. You know, life is that way--in a state of steady change.

I'm betting you're so set in your ways that you didn't even read the article. :roll:
 
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OrphanSlug

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Because details have changed in 25 years. You know, life is that way--in a state of steady change.

I'm betting your so set in your ways that you didn't even read the article. :roll:

Sure circumstances change. But the theory of transaction costs and their effects on markets is rather constant. Or had you seen a change in the theory or empirical evidence of its being wrong?
 

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There has to be a better way to deal with financial transaction fairness without taxation. Not sure what that is but this idea might have repercussions.

Agreed. For every action there is an equal and opposite reaction. That's physics, of course, this is finances.

It seems like a good idea to me, and if we could stop spending obscene amounts on the military industrial complex we might actually have a positive reaction to this.
 

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There has to be a better way to deal with financial transaction fairness without taxation. Not sure what that is but this idea might have repercussions.

A transaction tax makes the market less efficient unless the number and speed of transactions is more costly than the benefits from efficiency. Because there is definitely a loss from lower efficiency involved.
 

KLATTU

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Forbes WelcomeWhich brings me to two things. We’ve had one recent Nobel Laureate in Economics whose Nobel was for the study of taxation systems. That’s Sir John Mirrlees (along with Peter Diamond). And one of the points that they make is that transactions taxes, taxes like the FTT, are a really, really bad idea. It’s entirely fine to try to tax the financial sector more (I don’t know about Diamond but Mirrlees would think it OK) but the way to do that is through a consumption tax (like sales tax, or VAT) not a transactions tax
 

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If speculators can deduct losses at the same rate that their profits would be taxed, then sure, we could tax the speculators without adversely impacting the flow of capital into risky markets. Speculation (risky investments into volatile markets) is the only way some business owners in certain markets get capital infused into their businesses since the average bank will not do so. Green energy is an example, and the Obama Administration had to use federal tax dollars to speculate on green energy companies because even the private speculators weren't that brave. Speculation is already a risky enough venture, with a huge downside for potential losses, that the potential for major profit actualization is the only remaining incentive for investors to take the risk. If the government were to tax those potential profits at a level that exceeds the risk/reward calculus that investors use to decide whether to invest or not, then a major source of capital will dry up. For potential loss tax deductions and potential profit tax assessment to find an equilibrium within such a volatile market environment, then other processes that Progressives hate will have to be secured for investors to utilize such as Retained Earnings, Revenue Loss Carry Forward, and the BIG one... Carried Interest Deduction.

Basically, it isn't just a simple as "we should tax those rich guys."
 

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If speculators can deduct losses at the same rate that their profits would be taxed, then sure, we could tax the speculators without adversely impacting the flow of capital into risky markets. Speculation (risky investments into volatile markets) is the only way some business owners in certain markets get capital infused into their businesses since the average bank will not do so. Green energy is an example, and the Obama Administration had to use federal tax dollars to speculate on green energy companies because even the private speculators weren't that brave. Speculation is already a risky enough venture, with a huge downside for potential losses, that the potential for major profit actualization is the only remaining incentive for investors to take the risk. If the government were to tax those potential profits at a level that exceeds the risk/reward calculus that investors use to decide whether to invest or not, then a major source of capital will dry up. For potential loss tax deductions and potential profit tax assessment to find an equilibrium within such a volatile market environment, then other processes that Progressives hate will have to be secured for investors to utilize such as Retained Earnings, Revenue Loss Carry Forward, and the BIG one... Carried Interest Deduction.

Basically, it isn't just a simple as "we should tax those rich guys."

I know many ordinary working americans who play the game every day, thanks to computers. They are not "rich guys" but ordinary wage earners who play the market. Yes, they took a bath in 2008, but that did not stop them from playing. I compare it to casino gambling. One of my brothers has been doing it for years. He is comfortable, but not rich.

I see it as a good source of tax revenue, but it's too sensible for the average American to support. They prefer deficit spending.
 

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I know many ordinary working americans who play the game every day, thanks to computers. They are not "rich guys" but ordinary wage earners who play the market. Yes, they took a bath in 2008, but that did not stop them from playing. I compare it to casino gambling. One of my brothers has been doing it for years. He is comfortable, but not rich.

I see it as a good source of tax revenue, but it's too sensible for the average American to support. They prefer deficit spending.

We're talking about speculators, major investments into businesses not normally open to NASDAQ, NYSE, or other markets, not the average stock market trade done by a home trader or even a person through their stock broker, or even the futures market trades. However, the OP tax would effect the ones you mention as well, but not in a way that would prevent most of them from continuing to participate in the market, as it would put a chilling affect on major speculators and potentially negatively impact the US economy in ways yet to be imagined.
 

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We're talking about speculators, major investments into businesses not normally open to NASDAQ, NYSE, or other markets, not the average stock market trade done by a home trader or even a person through their stock broker, or even the futures market trades. However, the OP tax would effect the ones you mention as well, but not in a way that would prevent most of them from continuing to participate in the market, as it would put a chilling affect on major speculators and potentially negatively impact the US economy in ways yet to be imagined.

Yes, I suppose that's true. I think it is equally true that deficit spending year after year after year ALSO has a negative impact on the US economy, as does fiat banking.

As this law has not even been effectively proposed or written yet, don't you think that rational public discussion of details might allow us to avoid such pitfalls? Do you think we can study how various other jurisdictions enforce such a tax and arrive at a better, but similar, method?
 

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Why Isn’t Everyone In Favor of Taxing Financial Speculation? | Common Dreams | Breaking News & Views for the Progressive Community

This is a coherent explanation of the benefits of a proposed Financial Transactions Tax.

Thoughts?

I have always been a big supporter although I would take it to one-half of one percent and even at that its just a minor inconvenience to those paying while still raising a ton of revenue on the other end. We need to rebuild our infrastructure and this is a good way to do it.
 

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I had a 10% tax on my super bowl bet. It didn't stop me from betting and I was happy to pay it.

Great, if it makes you happy and you can afford it then feel free to tithe the federal government above your tax level. Leave us alone.
 

ludin

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There has to be a better way to deal with financial transaction fairness without taxation. Not sure what that is but this idea might have repercussions.

technically they are already taxed.

every stock trade comes with a trader fee. that fee can be 5 or even 10 dollars depending on the site.
so when you buy a stock you pay a fee when you sell a stock you pay a fee.

the trading site collects those fee's but has to pay taxes on those fee's.

so stock trades are technically taxed already.

then the person will have to pay income tax or capital gains tax for any profit made.
 
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ludin

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I had a 10% tax on my super bowl bet. It didn't stop me from betting and I was happy to pay it.
good for you feel free to give the government as much money as you want.
however you don't get to make that decision for everyone else.
 

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If speculators can deduct losses at the same rate that their profits would be taxed, then sure, we could tax the speculators without adversely impacting the flow of capital into risky markets.

AFAIK, they *can* deduct losses and certainly can deduct expenses and taxes paid.

Not only are they deductible, but they can be carried-forward into subsequent years if they exceed their tax liability for the year which results in tax reductions in those subsequent years.
 

ttwtt78640

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Umm, that's not a tax; It's a fee which is why it's called a fee.

It is not a tax because it is not payable to the government - there are (user?) fees which are payable to the government (e.g. vehicle license and registration fees) which, although semi-voluntary (conditional?), could be considered as taxes.
 

American

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ludin

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It is not a tax because it is not payable to the government - there are (user?) fees which are payable to the government (e.g. vehicle license and registration fees) which, although semi-voluntary (conditional?), could be considered as taxes.

he didn't read my post.

the people that collect those fee's have to pay taxes on those fee's.
so indirectly those transactions are taxed as the people that collect the fee's include the tax they have to pay in them.
 

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AFAIK, they *can* deduct losses and certainly can deduct expenses and taxes paid.

Not only are they deductible, but they can be carried-forward into subsequent years if they exceed their tax liability for the year which results in tax reductions in those subsequent years.

You're correct. I didn't mean for my statements to insinuate otherwise - other than to demonstrate how additional tax burden and/or restricting current available tax incentives could be harmful to the investment speculator which would be harmful to the economy. Potentially more harmful to our economy than any increased tax revenue could potentially offset. There is a groundswell of support for removal of Carried Interest Deductions, and so forth. I'm referring only to federal taxes, not state or local taxes as well.

But, yes, you recall correctly.

Basically, I believe that everyone should pay taxes on income received from ones investment of time, labor, or money. That covers everyone, with the exception of two groups. I would exempt inheritance, which I feel was already taxed and should not be double taxed just because a person dies. I would also exempt those that are 150% or 200% (depending on a number of factors) of the poverty level or below from paying federal income taxes. I also, after examining it for years, agree with cpwill's description of a negative tax to replace social programs, where those that meet the means testing would receive a minimum income level in lieu of upteen different social programs which would include no federal tax burden for those people. The same basic reasoning goes into my thought process on the subject of this thread - taxes and federal programs should spur economic growth and advancement of the people, not hinder or restrict their progress.
 
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