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Zaniard
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Robin Hood Tax
Sep 16th, 2015 at 1:33pm
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Facebook discussion this morning guy brought up this Robin hood tax. I copied and pasted from the site what it does below. Right off the bat its a tax and though I know some taxes are required to run a country. I think we can agree less taxes the better. But was trying to think how this would make government bigger and make us less free. I just wanted to ask you guys how this would be good or bad. I'm not big into the inner workings of Wall St. So that's why I thought I'd ask.

Thanks

This bill sets a small sales tax of 0.5 percent – just 50 cents on every $100 of stock trades – and even smaller amounts on transactions of bonds, derivatives or other financial speculation.  Brokers carrying out the trades would be charged the tax, unless carried out directly by investors.  Households with adjusted gross incomes under $75,000 would be exempted. The fee would not apply to ordinary consumer activity, such as credit card or ATM transactions, checking accounts, personal loans or tax free municipal bonds.
  
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Jeff
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Re: Robin Hood Tax
Reply #1 - Sep 16th, 2015 at 5:57pm
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You mean stock trades aren't taxed already?

The easy fundamental is, if you tax something, you get less of it.

If you want to make it more expensive to trade in the stock market, more small investors will be driven out. If you tax it enough, maybe only the mega-rich will be able to afford to trade stocks.... they will control the market. They'll be very successful cronies.

Is that a good idea?

BTW, is this going to be a tax on profit, or just on "exchange", on trade? That would make it a Direct tax, and it would have to be apportioned. Let's take that question to the Supreme Court. I'll send my Atty. General over tomorrow.

The national government wants a fee every time people make any kind of trade? Sure, they do.

The national government is currently collecting record high revenues, but they want much more. Much, much more.

But only from productive people, workers.
  

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Zaniard
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Re: Robin Hood Tax
Reply #2 - Sep 17th, 2015 at 9:04am
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Thanks for the reply
  
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stevea
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Re: Robin Hood Tax
Reply #3 - Sep 18th, 2015 at 11:07am
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Zaniard wrote on Sep 16th, 2015 at 1:33pm:
Facebook discussion this morning guy brought up this Robin hood tax.[...]

This bill sets a small sales tax of 0.5 percent – just 50 cents on every $100 of stock trades – and even smaller amounts on transactions of bonds, derivatives or other financial speculation.  Brokers carrying out the trades would be charged the tax, unless carried out directly by investors.  Households with adjusted gross incomes under $75,000 would be exempted. The fee would not apply to ordinary consumer activity, such as credit card or ATM transactions, checking accounts, personal loans or tax free municipal bonds.



WOW - is that text filled with biased bull-crap language or what ?

Quote:
just 50 cents on every $100


"Just" gimme half a percent of YOUR net worth if it's so small!

So the government snips 1/2% off of every stock trade.  If you buy a stock and then sell it the government takes 1% for the round-trip !  Do they have any clue how how many trades are at break-even or a loss or a tiny margin ?  A typical actively managed mutual fund would have around 150% turnover per year. They BUY and SELL 1.5 times their assets annually.  So gov skims 1.5% of assets. LT market return after inflation is ~7%/yr, so gov  wants to take ~21% of all market gains - ON TOP of the cap-gains tax - INSANE!

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Quote:
Brokers carrying out the trades would be charged the tax


So what ?  Laughable logic.  Does anyone sane imagine that brokers are going to absorb a tax that costs 0.5% of assets! On a $100k trade the cost is ~$8, and the tax ~$500!  Those buying & selling stocks will pay this tax.

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Quote:
Households with adjusted gross incomes under $75,000 would be exempted.


Great -  another class-warfare carve-out from the Left ?  I can see a lot of ppl choosing married filing separately or creating brokerage accounts for their kids.

Further now every BROKER then has to know how much your AGI is !  What if you start the year at $70k AGI but get a raise - better tell your broker and pay the back tax.  What if you create a trust - then whose AGI is measured - it's NONSENSE.  All money in mutual funds (either personally or thru a retirement plan) is also traded too. Do you have to report your family AGI to your company retirement plan manager and the MF company too ?

I just got smacked by my healthcare provider.  They NEED my social security number so they can report to the IRS that I have Obamacare compliant HC.  This is BALONEY - I want my freedom & privacy back.


===========

Language and practicality aside - what does this tax do ?

It imposes a barrier to free trade, so it causes market distortions and inefficient allocation of resources.   You will likely avoid/delay buying & selling when it is rational b/c of this big hurdle.  So stock prices will less perfectly reflect their value.  That is bad for everyone - it means the product & production aren't understood as well and this causes mis-pricing.  It meas less capital esp to small high-risk biz.

This idea was suggested in the EU (at 0.1% rate) a few years ago.   Every economist on the planet denounced it as crippling the economy.

http://www.iea.org.uk/in-the-media/press-release/financial-transactions-tax-prop...

http://www.iea.org.uk/publications/research/the-case-against-a-financial-transac...

The high-points of the argument....

Quote:
/ There is strong economic evidence that the proposed Financial Transactions Tax (FTT) would not increase the amount of tax revenue collected by governments. In fact it would reduce total tax revenue by shrinking the economy.

/ Workers and consumers in general - not the banks - would carry the main economic burden of the FTT. Wages would be lower because the tax would increase the cost of capital, thereby reducing growth in productivity.

/ Returns on pension funds and other savings would also be lower, in part because the FTT would increase the costs of buying and selling shares as well as reducing their values.

/ The FTT would not have prevented the financial crisis, nor would it have avoided current sovereign debt problems. The tax would shrink those parts of the financial markets which did not contribute to the recent crisis but would not make much difference to the factors that caused the crash.

/ The FTT would not reduce volatility; it would increase it. Market movements will come in larger steps if speculation is discouraged. It is preferable to have deep and liquid markets so that changes are incremental and smooth.



Especially note the European Commission finding ,
‘With a tax rate of 0.1% the model shows drops in GDP (-1.76%) in the long-run"

So a 0.5% tax might cost the US an 8.8% GDP decline - similar to the great recession 2007-9.
« Last Edit: Sep 18th, 2015 at 12:29pm by stevea »  
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stevea
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Re: Robin Hood Tax
Reply #4 - Sep 18th, 2015 at 12:56pm
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How does this "square" with anyone's right to equal treatment by government.

Yes, there is an amendment that says congress can tax income, and can create excise taxes.  Where does it say they can impose excise taxes selectively based on income ?

It looks more like 75% stealing from 25% by means of government.

  
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