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financial transaction tax

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  #21 (permalink)
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canoekoh View Post
as FTT news is thrust in front of the public more and more, it will gradually gather momentum and support among the public, whose conception of a FTT amounts to little more than a "extra tax for the rich!"

and it's especially troubling for the US to implement FTT b/c the US often serves as model for other countries in terms of financial regulations.

and what's sad is Wall Street will happily accept FTT b/c they will be the ones to receive exemptions. they have to, unless you want capital markets with no MM aka no liquidity, which no politician is going to want. given how much our pensions are invested in such instruments, you have to give exemptions to Wall Street no matter what.

it's the retail traders that will be absolutely crushed to pieces by this. day after day, Democrats make it harder for me to vote for them even when the alternative is so unappealing.

Wall Street will fight it tooth and nail. They told Hillary in 2016 that she would lose their support if she backed the FTT so she dropped it. An FTT that only applied to retail traders wouldn't bring in a dime of revenue.

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  #22 (permalink)
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srgtroy View Post
Wall Street will fight it tooth and nail. They told Hillary in 2016 that she would lose their support if she backed the FTT so she dropped it. An FTT that only applied to retail traders wouldn't bring in a dime of revenue.

Possibly, but banks and hedge funds can simply buy/sell otc total return swaps if worse comes to worst with which they would pay 0% FTT given how these artificial instruments are structured. And this is just 1 example. Finding ways around the law is their specialty, especially with the army of lawyers from Cravath, Wachtell, Sullivan Cromwell, DPW, Skadden that specialize in these things.

It's more likely they wouldn't even need to find loopholes since the final bill itself would have to include exemptions for banks/funds, as mentioned before. No politician, not even AOC, would want to create a situation in which markets are extremely illiquid with wide spreads, causing chaos in the portfolios and pensions of everyday Americans due to the volatility. The #1 issue for any politician is always going to be the economy. Because if the economy is doing well, politicians can honestly get away with a lot of shit b/c the general populace really don't give too much of a shit about reigning in their representatives as long as they're getting paid, fed, and their desires satiated.

And even if, like you said, this would lead to no revenue being brought in, I'm pretty sure Democrat politicians like AOC care more about just getting it passed, b/c it demonstrates to the public that they're "for the people, against the rich." It's more about optics than nuance.

When's the last time you saw politicians pass a nice-sounding bill with all the populist bells and whistles and when the bill didn't turn out the way it should have, they admitted their mistake and voted to overturn it? (hint: never i.e. *bamacare)

Bills are hard to pass but once they do, it's even harder to overturn them. Politics 101 is basically to never apologize and admit past mistakes, especially in this day and age of doubling down. This goes for both sides, but esp the Republican side.

This trend of increasing populism is partially the wealthy's fault. One cannot deny that the ridiculously increasing wealth gap in the US and globally has been due to the top 0.01%'s greed squeezing out the middle class. Can you really blame the average folks making 30-50k a year for believing in the premises of this bill and supporting it? The top 0.01% continue to bite the hand that feeds them and people are losing hope and think erroneous platforms like Bernie/AOC are proposing are the real solution.

Personally, the best solution would be to enact a high estate tax. FTT and too high capital gains tax hurt capitalism and the economy (and us retail folks). 70% highest bracket tax on personal income is just pure stupidity since almost no one making that much earns it from personal income.

A high estate tax for high income brackets means the gov't isn't going to tax-rape you while you're alive so you still get to enjoy all the QoL that comes from successfull capitalism. You will still be able to pass along millions to your children, instead of billions. I am not a major fan of generational wealth, as it only exacerbates wealth gaps in society.

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  #23 (permalink)
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canoekoh View Post

This trend of increasing populism is partially the wealthy's fault. One cannot deny that the ridiculously increasing wealth gap in the US and globally has been due to the top 0.01%'s greed squeezing out the middle class. Can you really blame the average folks making 30-50k a year for believing in the premises of this bill and supporting it? The top 0.01% continue to bite the hand that feeds them and people are losing hope and think erroneous platforms like Bernie/AOC are proposing are the real solution.

Personally, the best solution would be to enact a high estate tax. FTT and too high capital gains tax hurt capitalism and the economy (and us retail folks). 70% highest bracket tax on personal income is just pure stupidity since almost no one making that much earns it from personal income.

A high estate tax for high income brackets means the gov't isn't going to tax-rape you while you're alive so you still get to enjoy all the QoL that comes from successful capitalism. You will still be able to pass along millions to your children, instead of billions. I am not a major fan of generational wealth, as it only exacerbates wealth gaps in society.

Agree with you on all this. Problem is once the pendulum swings all the way in one direction, it tends to swing back way past the balance point and all the way in the other direction.

From what I've read, those pushing for a financial transaction tax have their eyes fixated on high frequency trading first and foremost, not realizing that without the HFTs, liquidity and volatility would both become huge problems, as HFTs are the new market makers.

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Years ago a lot FTT talk was anti-HFT in nature. Now it seems to be aimed a lot more at 'Wall Street' and the people perceived to have the money. I think their goal will be to tax and reign in the excess and not destroy the capital markets. Obviously even a tiny tax applied to everyone would cause many markets to grind to a halt, and liquidity in all other markets to dry up considerably. So if we assume they don't want that to occur, there has to be exceptions. Question is who would get those exceptions? Market makers? Swap Dealers/Banks? Pension Funds? ECPs? Still don't think it happens, and even if it does most of the trading goes off shore.

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Hey @xplorer. I saw you closed the duplicate FTT thread. Any chance you can move this one out of the Currency section and into a location more visible?

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SMCJB View Post
Hey @xplorer. I saw you closed the duplicate FTT thread. Any chance you can move this one out of the Currency section and into a location more visible?

Threat moved to Traders Hideout.

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srgtroy View Post
NYSE, NASDAQ & CME moving off shore.

look at the growing volume in the CFD marked .

Let me quote Wikipedia : They were initially used by hedge funds and institutional traders to cost-effectively hedge their exposure to stocks on the London Stock Exchange, mainly because they required only a small margin. Moreover, since no physical shares changed hands, it also avoided the stamp duty in the United Kingdom.

so if any tax is coming NYSE, NASDAQ & CME will be the biggest looser and welcome the CFDs
(anyway the best choice if you are not in the US)


I think you can put NYSE, NASDAQ & CME into the museum even without tax cuts!

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The entire industry will, at a minimum, cite the failed Swedish implementation of a transaction tax; bond trading fell 85%, futures trading fell 98%, options market completely died. And this was in the first week after the tax went into effect. It was repealed about 6 years after implementation. The devastation to the industry was widespread. Revenues from the tax were less than 10% of what was forecast.

Expect every exchange, broker, and intermediary in all asset classes to fight tooth and nail. There's just too much to lose. Libs, particularly one from Oregon, have been floating this stupid idea for 10 years never getting any real traction.

My prediction; the more traction this stupid idea gains, the harder the industry will fight back. Targeted exemptions won't be enough to satisfy those exempt because everyone has something to lose should a transaction tax be implemented. The idea should be a non-starter but in the current political climate with its oppossing income inequality-socialism saves theme, the far leftists in the Democratic party think it's an idea whose time has come.

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AOC really should be shamed for presenting this as HER's - and no I don't want to fight her name is all over the news .

The Transaction tax web page from congressional budget office.
2016 https://www.cbo.gov/budget-options/2016/52287
2018 https://www.cbo.gov/budget-options/2018/54823

There is a 2011 USELESS response by a Senator --this has been on deck for years.
Futures.io has had this discussion before and there were detailed conclusions the last time

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SMCJB View Post
Years ago a lot FTT talk was anti-HFT in nature. Now it seems to be aimed a lot more at 'Wall Street' and the people perceived to have the money. I think their goal will be to tax and reign in the excess and not destroy the capital markets. Obviously even a tiny tax applied to everyone would cause many markets to grind to a halt, and liquidity in all other markets to dry up considerably. So if we assume they don't want that to occur, there has to be exceptions. Question is who would get those exceptions? Market makers? Swap Dealers/Banks? Pension Funds? ECPs? Still don't think it happens, and even if it does most of the trading goes off shore.

Some on the extreme left probably do want to destroy the capital markets and others may want to reform them but have no idea what they are actually doing and could destroy them by accident (as was done in Sweden). I think HFT is a convenient target to zero in on but I agree the sentiment has now become broader. Ultimately, this is all part of a movement to restore some balance to wealth distribution in a country that has seen its middle class hollowed out by US corporations using foreign labor. Luckily, there are easier and less technical ways to do that then the FTT, so you may be right that the FTT never happens. If they couldn't pass it immediately after the Great Recession, they may not be able to pass it now. On the other hand, wealth distribution has only gotten worse since then.

Exchanges moving offshore sounds like a great solution, but is it really practicable? Will laws not be passed to find a way to prevent trading offshore exchanges. Of course, I suppose one could always get vps (and bank account) overseas and then we start getting into a whack-a-mole situation. In the long-term, I think @carofa may be right but that is not going to happen overnite.

Its disturbing when you have people like Robert Reich openly advocating for an FTT. This is from Senator Brian Schatz' twitter feed. He is the one introducing the FTT tax bill in the Senate, not that it will ever see the light of day there for now:


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