I did not know where to post this but all of you may want to read it and sign the petition.
The Government Is About to Destroy the
By Jeff Clark
Is there no common sense left anywhere in Washington D.C.? Just when you think our elected officials have reached the peak of stupidity, they somehow manage to go a little farther.
Back in February, U.S. Congressman Peter DeFazio introduced bill HR 1068, "Let Wall Street Pay for Wall Street's Bailout Act of 2009." The proposed legislation imposes a 0.25% tax on all stock, bond, and option transactions. So anyone with the audacity to buy and sell 100 shares of Apple would pay about $50 in taxes for the round trip.
There are so many problems with this proposed legislation, I don't know where to start. How about with the name? This is not "Wall Street paying for Wall Street's bailout." You and I, as taxpayers, have already paid for that. Now, you and I, as traders, are being asked to open our wallets again.
Individual traders didn't cause the financial crisis that sent global markets into a tailspin last year. Corporate executives making overleveraged bad bets with other people's money and idiotic regulators who loosened the rules during the height of the housing mania caused it.
Let's call the bill what it really is... "Let the Government Confiscate an Extra $150 Billion a Year of Your Money."
The tax was originally proposed to help fund the various bailout programs. That idea, however, ran into some resistance, as the "bailout" idea isn't polling too well with the electorate these days. So now, the tax is being marketed as a way to help pay down the deficit.
I have a better idea to pay down the deficit. How about... STOP SPENDING MONEY YOU DON'T HAVE!
We all know none of this tax money is going to pay down the deficit. It's going to be used to increase spending on more government programs and increased bureaucracy. That's how Washington works.
Let's also consider the unintended consequences of this act. It will put a lot of small traders out of business. Individuals who day trade to capture small profits will have much of their gains eaten away by the tax. Consider a trader who uses the same $10,000 to buy and sell stock each day. One round trip each day for a week creates a $250 tax bill. That's 2.5% of his principal amount. How do you stay in business when you have to make 2.5% per week just to break even?
As smaller traders drop by the wayside, discount brokerage firms will do far less business. And the exchanges on which these trades take place will see their order flow diminish. Job losses will no doubt follow. Market liquidity will also decline, resulting in larger spreads between bid and ask prices.
The backers of this bill claim it really only affects day traders and speculators... meaning the average person is largely unaffected. That's simply not true.
In today's world, the average person owns mutual funds. Mutual funds will need to increase their fees in order to pay for the tax. Since the average turnover in mutual fund holdings is something like 100% each year, fund holders can look forward to seeing their returns decline by at least 0.5% each year. Anyone holding mutual funds for the past decade is barely above water as it is. Knock 0.5% off the annual return, and the results go negative.
Finally, this tax is just patently unfair. Traders already pay income tax on their capital gains. Now, they're being asked to pay an additional tax on the principal value of their trades.
The bill was introduced in February... Now, it has somehow made its way into committee. It needs to be stopped here.
Please contact your Congressman and tell him or her you oppose HR 1068 – The Trader Tax. Or sign the petition to stop the Trader Tax...
It won't pass.
Agreed. They will need to get every global market to do this. Every trader will just trade different instruments or trade elsewhere. NY would get wiped out.
It amazes me how so many dumb rules are introduced without anyone thinking of the consequences.
They will raise the cap gains rates before they do this.
This is another example of the hypocrites in congress. It is funny that I have to spend 25 minutes with our auditor because a wholesaler bought me lunch, but these jerks can accept hundreds of thousands of dollars for their PAC's. Unbelievable!
we really have to be careful. they missed madoff, standford, subprime etc etc.
they will be looking to bust people. rigth or wrong
These elitests in D.C. are totally clueless!!! This will not punish Wall Street greedy bastar**, as this tax will only be passed on to anyone with any Money at all in the U.S. markets. Don't they realize that this will affect almost everyone from the Moms And Pops to union pension plans? Once more "taxes for those making less than $250,000 will not go up 1 dime" has turned into the biggest lie and con job ever. I agree this won't pass because traders will go global while wiping out all the stupid hands that feed these idiots.
that insider trading deal (Indian guy) is a freaking joke. witch hunt
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