An idea so good it'll never happen: Robin Hood Tax

[NorvTurnerOverdrive]

from mother jones (http://www.motherjones.com/mojo/2012/06/robin-hood-tax-comes-america)
Robin Hood Tax activists, who are pushing for a financial transactions tax to generate revenue to invest in jobs, health care, housing and education, officially launched their United States campaign on Tuesday.

According to a press release from the campaign, a .05 percent tax on every $100 of stock trades could generate hundreds of billions of dollars annually. (The rate could be even lower on other financial transactions.) Over 1,000 leading economists have endorsed the idea of a financial transactions tax, including Nobel Laureate Joseph Stiglitz, Columbia University economist Jeffrey Sachs and Lawrence Mishel of the Economic Policy Institute.

The notion of a tax on stock trades and other financial transactions is not new—in the United States, the federal government taxed every sale or transfer of stock between 1914 and 1966. But in the wake of the 2008 financial crisis, the idea has gained new support—especially overseas. German chancellor Angela Merkel recently said a financial transactions tax would be "the right signal to show that we have understood that financial markets have to contribute their share to the recovery of economies."

http://robinhoodtax.org.uk/

makes way too much sense to ever happen here.

[Julio Riddols]

I like it.

[Marc Vaughan]

I love the concept myself because it would instantly return the stock market to INVESTMENTS not gambling on hugely leveraged micro-transactions.

[stevew]

I much prefer a system where poor people pay 36 dollars per overdraft if they miscalculate their checking account balance.

[Shkspr]

makes way too much sense to ever happen here.

Now, now, don't you think you're being too hard on a plan to raise billions of dollars in new taxes championed by Europeans and presented by Mother Jones? Who would possibly stand in its way? :p

[JonInMiddleGA]

"to the recovery of economies" <> government stealing from anyone to redistribute revenue to invest anywhere outside of the narrow confines where there's a legitimate imperative.

This is so completely odious that I'm struggling to maintain a remotely civil tongue (or possession of my just completed tacos) so I'll just take my leave of the thread.

[Grover]

"to the recovery of economies" <> government stealing from anyone to redistribute revenue to invest anywhere outside of the narrow confines where there's a legitimate imperative.

This is so completely odious that I'm struggling to maintain a remotely civil tongue (or possession of my just completed tacos) so I'll just take my leave of the thread.

Yes a 50 cent tax on every $100 is truly enough to make someone vomit.

[BillJasper]

"to the recovery of economies" <> government stealing from anyone to redistribute revenue to invest anywhere outside of the narrow confines where there's a legitimate imperative.

This is so completely odious that I'm struggling to maintain a remotely civil tongue (or possession of my just completed tacos) so I'll just take my leave of the thread.

Just wow.

Fifty cent tax on a hundred dollar transaction causes this type of reaction. I think it's a good idea considering Wall Street helped crash the economy to begin with.

[cubboyroy1826]

Come on really a 50 cent tax for every $100. I get it is not much but how about we get these politicians to stop pissing away our money on stupid stuff. You know like money allocated to study the effect of cows farting on the environment. Face it most of these BS taxes just legalized theft of our income. I am okay with having to pay taxes but christ lets get a grip on where the current tax money is going. Shoot if they taxed everyone at 75% of their income I still think we would have budget problems.

[Suicane75]

What if we put a tax on your fucking tacos? Huh bro?

[cubboyroy1826]

Really Bill? There is a very long list of people to blame for the economy, Wall Street being one of them. Do we blame people who mortgaged themselves too deep on Wall Street? Do we blame the financial regulations that were lifted during the Clinton administration? Do we blame GW and others for the neverending wars/conflicts? Of course all of these are part of the problem and there is a long list of others.

[CraigSca]

I actually think this is a good idea. Now, where's the part about the government paying down the debt with this money? Another question - half a percent is nothing, but who's to say it won't go up? That's why people get freaked about new taxes.

[Young Drachma]

This conversation will go well.

[molson]

I'm pretty sure we can just spend the hundreds of billions without the tax.

As a fundraising thing, I think the tax is a fine idea. But that's not really the heart of it, just like the "higher taxes on the rich". The idea is to take something from people we think have too much. I don't think that either kind of tax would actually result in better government services, or a smaller government debt, or more help for the poor. It's just a way to make people feel better.

Edit: I saw a facebook thing going around attributed to Stephen King. The general gist was that all "we" want is the rich to appreciate how lucky they are, and to appreciate the systems in place in this country that protect their wealth. Great. We should all be thankful for our blessings, I definitely am. But it's an emotional need to desperately want other people to be be so appreciative too, it's not a fiscal one. We want statements. We could do so much more with the revenue this country does earn but we want to make emotional statements about fairness.

Edit: Here's the stephen king thing.

Stephen King Had Something To Say About Romney And It Ended Up On This Graphic - Democratic Underground (http://www.democraticunderground.com/1002631522)

He's right, of course. But it's an emotional need, not rational fiscal argument about how the government can best provide for its citizens. That's the argument you never hear. How will America be better if this tax is passed? Will be able to stay in Iraq longer? Will we be able to prosecute more steroid perjury cases? I don't think anybody really cares (and by the way, the answer is "no", we'll do those things regardless of whether we have the money to). We just want people with more than us to have less (and we define rich as whoever has more than us). THAT'S the impetus. Because even more than unfair tax treatment, what really makes us angry is income disparity. Which is fascinating in a global economy. We don't like it if someone makes a lot of money from overseas, say Asia. It doesn't matter if that money would have just stayed in Asia if that company or guy didn't make it. No, we're mad that one of our companies or individuals is making it, and not us. And it's not even enough to just tax him more (which there's a lot of great arguments to do), the problem as expressed is that he makes it in the first place, and that we have that income disparity.

Edit again: It's weird because if I was a legislator, I'd probably vote for a tax like that, so I don't even disagree. I just find the rhetoric around it distasteful, and potentially dangerous. Let's raise taxes in targeted areas and have responsible plans for the added revenue, not just focus on people paying their "fair share" (i.e. having less).

[NorvTurnerOverdrive]

This conversation will go well.
hyep

[ISiddiqui]

I saw a facebook thing going around attributed to Stephen King. The general gist was that all "we" want is the rich to appreciate how lucky they are, and to appreciate the systems in place in this country that protect their wealth. Great. We should all be thankful for our blessings, I definitely am. But it's an emotional need to desperately want other people to be be so appreciative too, it's not a fiscal one.

I think that's a very small aspect of it - we want the rich to appreciate how the systems in place in this country protect their wealth, so that they can accept a slight bit higher taxation on the protected wealth to help pay for the things we all need.

Having millionaires not pay less than their secretaries in tax rates, for instance, is a good start. And proposals like this are good ways to raise money without having the rich even really realize how much is coming out.

[dawgfan]

Because even more than unfair tax treatment, what really makes us angry is income disparity.
That's not strictly true - as a whole, Americans don't hate income disparity. The issue is that the actual income disparity is much greater than we think it is, and far, far greater than we think it ought to be.

[molson]

I think that's a very small aspect of it - we want the rich to appreciate how the systems in place in this country protect their wealth, so that they can accept a slight bit higher taxation on the protected wealth to help pay for the things we all need.

Having millionaires not pay less than their secretaries in tax rates, for instance, is a good start.

If they just all signed something that said how much they appreciated America, would that be enough?

Taxes seem like a separate issue, a fiscal issue. They'll have to pay whatever the tax code requires them to pay, regardless of how much they appreciate America. If it's fiscally sound to change the tax code, then we should change it.

[molson]

That's not strictly true - as a whole, Americans don't hate income disparity. The issue is that the actual income disparity is much greater than we think it is, and far, far greater than we think it ought to be.

Would we all be happier if the rich made less money in a global economy, and the rest of us made the same? That would mean less tax revenue for the country. Which is why I think "income disparity" is another one of those emotional things that doesn't have a basis in rationality. It's not where our focus should be. US income is not a zero sum game. I'm more concerned with how they're making the money, whether they doing it legally, whether they're doing it in a way that's productive for our economy, and whether they're doing it in an unfair/unethical manner, indicating perhaps more regulation is appropriate in whatever area.

Thank god our companies and 1% are still competitive in a global economy. We'd be pretty fucked if they weren't. Tax them more, be responsible with the added revenue, but the problem isn't the income itself. And the problem certainly isn't the fact that they're so successful in a global economy.

[NorvTurnerOverdrive]

i don't give a fuck about income disparity. i despise poverty. when the poor have more the world is a better place.

it's the difference between your car breaking down in the suburbs and your car breaking down in the favela/barrio/gov't housing. one is an inconvenience. the other is a matter of life and death.

[ISiddiqui]

If they just all signed something that said how much they appreciated America, would that be enough?

Taxes seem like a separate issue, a fiscal issue. They'll have to pay whatever the tax code requires them to pay, regardless of how much they appreciate America. If it's fiscally sound to change the tax code, then we should change it.

:headwall: What I'm trying to say is that it isn't an emotional issue - it's a they can afford extra taxation more than people who don't make enough issue.

[larrymcg421]

I actually hate the "pay their fair share" argument. It's such a poor way to phrase the debate, which does not necessarily have to be about the rich vs. the poor. "Fair share" shouldn't have anything to do with it. The question is what makes good economic sense. I think it is unquestionably a better idea to get extra tax revenue (which is obviously a need at this point) from investment income than to get it from poor, middle class, and upper middle class citizens who would otherwise use that money to purchase economic goods.

[molson]

I actually hate the "pay their fair share" argument. It's such a poor way to phrase the debate, which does not necessarily have to be about the rich vs. the poor. "Fair share" shouldn't have anything to do with it. The question is what makes good economic sense. I think it is unquestionably a better idea to get extra tax revenue (which is obviously a need at this point) from investment income than to get it from poor, middle class, and upper middle class citizens who would otherwise use that money to purchase economic goods.

Agreed, and damn, I wonder if THAT would be a more effective push than the social class warfare/OWS stuff. I'd like to think it would be. I mean, I hate that shit so much it makes me much more fiscally conservative than I really am. When I see Stephen King's face on my facebook whining about "fair shares" and "appreciation" and the "1%" it brings me to a very conservative place. But I buy a lot of the fiscal arguments (for example, I think the nature of our new global economy does warrant higher taxes on higher incomes when previously I'd think a flat tax was more fair.....because our 1% can compete in and benefit from a global economy in a way most other employees cannot, so a higher tax relative tax burden is appropriate - but I just think demonizing that group was a big strategy fail.)

[dawgfan]

Would we all be happier if the rich made less money in a global economy, and the rest of us made the same? That would mean less tax revenue for the country. Which is why I think "income disparity" is another one of those emotional things that doesn't have a basis in rationality. It's not where our focus should be. US income is not a zero sum game. I'm more concerned with how they're making the money, whether they doing it legally, whether they're doing it in a way that's productive for our economy, and whether they're doing it in an unfair/unethical manner, indicating perhaps more regulation is appropriate in whatever area.

Thank god our companies and 1% are still competitive in a global economy. We'd be pretty fucked if they weren't. Tax them more, be responsible with the added revenue, but the problem isn't the income itself. And the problem certainly isn't the fact that they're so successful in a global economy.
I'll bow out of this (I've learned to not get into political arguments on forums), but I'll just say I don't believe for a second that the rich paying a greater share (as they have done in the recent past) would cripple the economy. And if our government had any spine and any sense of morality, they'd prosecute the obscene fraud and theft committed on Wall Street and take real, substantive action to severely restrict the ability of Wall Street to continue to steal unthinkable amounts of money from the rest of us, leading to a larger, more prosperous middle class and a much healthier economy.

[Masked]

My initial reaction is that a 0.5% tax rate is extremely high (it's a trillian dollars a year in revenue!) that will distort the market. It will make investing much more expensive for the average investor, reduce volume in the market which could make some stocks harder to trade (and thus worth less), potentially drive companies to list on exchanges outside the U.S, etc.

[ISiddiqui]

I also hate in the "fair share" argument that the perception is that it is the left that engages it the vast majority of the time. The right goes off on "fair share" all the damned time as well - when they talk about it not being 'fair' that the richest paying 40% of income to the feds in income tax or a new higher tax bracket is not fair or government theft.

That's not economic arguments either.

[Grover]

My initial reaction is that a 0.5% tax rate is extremely high (it's a trillian dollars a year in revenue!) that will distort the market. It will make investing much more expensive for the average investor, reduce volume in the market which could make some stocks harder to trade (and thus worth less), potentially drive companies to list on exchanges outside the U.S, etc.

Yes, a $5 tax on $1,000 of traded stocks is extremely high.

What?

[Masked]

Yes, a $5 tax on $1,000 of traded stocks is extremely high.

What?

I'll give you two examples that show how much this tax would distort the market and impact individual investors.
On a typical day Apple trades about 21 million shares. At is current value of about $575 per share, this means that about $12 billion of shares are trading hands everyday. A 0.5% tax (let's assume that only the buyer pays the tax, the seller doesn't have to pay a transaction tax), would raise $15 billion a year (21m * $575 * 0.5% tax * 250 trading days). There are about 5,000 exchange traded stocks in the US and 10,000 traded in over the counter markets. Thus, I roughly estimate this tax would generate about one trillion dollars a year in revenue, or 1/15 of the US GDP - thats a very big number.
The largest mutual fund in the US is Pimco's total return with about $260 billion in assets. It currently charges an annual fee of about 0.5%. If this tax was implemented, they would have to pay 0.5% tax every time they turned the portfolio over (i.e. sold/bought new stocks). PIMCO's total return fund has a turnover rate of 580%. That means they have to pay the 0.5% tax nearly 6 times every year on the your investment - that 3% cost will be passed on to the consumer either has increased fees or lower return. Now the turnover on this fund happens to be particular high. Most funds are closer to 100% per year, which still that results in a 50% to 100% increase in the cost to the investor.As I said, this was my gut reaction, maybe I'm interpreting the tax wrong, but it seems like it would have huge impacts on the market.

[RainMaker]

Seems gimmicky. I'd prefer to just focus on changing the tax code to move from a regressive tax system to either a flat or more progressive one.

[Shkspr]

It should probably be pointed out that the original UK website advocating the Robin Hood Tax is actually pushing a tax not of $0.50 per $100, but $0.05 per $100. Mother Jones fucked up the math in their journalism.

EDIT: It appears the "one half of one percent" figure is coming from the US campaign, led by actor Mark Ruffalo. The cynic in me thinks we may have figured out how Dr. Banner got hit with 10 times too much gamma radiation, but it may be that the US campaign is actually trying to lobby for a tax 10 times as great as that being pushed by the pirate Davy Jones in the UK.

[Jughead Spock]

Whatever good this could do is pretty much destroyed by the idiotic idea to label it a 'Robin Hood' tax. 'Steal from the rich...' Yep, that always plays well.

[larrymcg421]

Yeah the Robin Hood tax name is even worse than the "fair share" rhetoric. When I first saw the thread title, I certainly expected something far more extreme than this. People who just see the headline and don't bother reading much of the article (i.e. most people) will likely think the same.

[Marc Vaughan]

My initial reaction is that a 0.5% tax rate is extremely high (it's a trillian dollars a year in revenue!) that will distort the market. It will make investing much more expensive for the average investor, reduce volume in the market which could make some stocks harder to trade (and thus worth less), potentially drive companies to list on exchanges outside the U.S, etc.

The thing is it ISNT a trillian dollars a year in revenue - it'll stop the volatile micro-trades where someone buys a billion dollars worth of a stock, holds it for 1/10th of a second and then sells it in order to make $100,000.

That trade is not useful to the economy, it increases stock volatility and is gambling rather than investing.

The tax will raise a fair bit of revenue don't get me wrong, but it'll also encourage the stock market to act as intended - ie. investments not just gambling on statistical likelihoods.

[Marc Vaughan]

The largest mutual fund in the US is Pimco's total return with about $260 billion in assets. It currently charges an annual fee of about 0.5%. If this tax was implemented, they would have to pay 0.5% tax every time they turned the portfolio over (i.e. sold/bought new stocks). PIMCO's total return fund has a turnover rate of 580%. That means they have to pay the 0.5% tax nearly 6 times every year on the your investment - that 3% cost will be passed on to the consumer either has increased fees or lower return. Now the turnover on this fund happens to be particular high. Most funds are closer to 100% per year, which still that results in a 50% to 100% increase in the cost to the investor.[/LIST]As I said, this was my gut reaction, maybe I'm interpreting the tax wrong, but it seems like it would have huge impacts on the market.

Do you believe that by trading shares so constantly they are 'maximising customer benefit' - or just trading because the trades make them commission? ... I'd be included towards the latter myself (see my argument that this tax would help avoid share churning and wildy fluctuations ... while encouraging proper investment mentality).

[NorvTurnerOverdrive]

Yeah the Robin Hood tax name is even worse than the "fair share" rhetoric. When I first saw the thread title, I certainly expected something far more extreme than this. People who just see the headline and don't bother reading much of the article (i.e. most people) will likely think the same.
that's a really good point and something i didn't even consider. why the fuck did they call it that?

[CU Tiger]

Yes a 50 cent tax on every $100 is truly enough to make someone vomit.

shrug, would have cost me $500 yesterday with a move I made in an IRA account. Makes me want to vomit

I think the bigger issue is still the bottom side of the funnel.

I hear someone describe it this way the other day and laughed, I'll try to do it justice.

The US economy is like we are trying to fill an empty milk jug up with water. Since we were spilling water we went and bought a funnel. Unfortunately the small side of the funnel is as big around as a bath tub. Add the same amount of water and less is actually ending up in the jug. While most would realize the fix is to get a smaller output on the funnel (reduce spending) the US GOv ddecided if the top of the funnel was onyl as abig around as say the state of Kansas then we could more quickly fill the jug.

[CU Tiger]

potentially drive companies to list on exchanges outside the U.S, etc.

Ding, Ding, Ding

[JPhillips]

The thing is it ISNT a trillian dollars a year in revenue - it'll stop the volatile micro-trades where someone buys a billion dollars worth of a stock, holds it for 1/10th of a second and then sells it in order to make $100,000.

That trade is not useful to the economy, it increases stock volatility and is gambling rather than investing.

The tax will raise a fair bit of revenue don't get me wrong, but it'll also encourage the stock market to act as intended - ie. investments not just gambling on statistical likelihoods.

This. The money raised is less important than slowing down the skimming from high volume micro-trading.

[JPhillips]

shrug, would have cost me $500 yesterday with a move I made in an IRA account. Makes me want to vomit

I think the bigger issue is still the bottom side of the funnel.

I hear someone describe it this way the other day and laughed, I'll try to do it justice.

The US economy is like we are trying to fill an empty milk jug up with water. Since we were spilling water we went and bought a funnel. Unfortunately the small side of the funnel is as big around as a bath tub. Add the same amount of water and less is actually ending up in the jug. While most would realize the fix is to get a smaller output on the funnel (reduce spending) the US GOv ddecided if the top of the funnel was onyl as abig around as say the state of Kansas then we could more quickly fill the jug.

Taxation is as low as it has been in sixty years.

[lungs]

Extend this tax to commodities too, especially Class III milk!

[JPhillips]

Extend this tax to commodities too, especially Class III milk!

Oh great, more liberal class warfare.

[Marc Vaughan]

Ding, Ding, Ding

That is a valid concern and unfortunately why corporations are raping nations and controlling the creation of laws and effectively avoiding paying taxes to an unwholesome extent ...

In recent decades corporations went 'global' which allowed them incredible advantages in playing nations off against each other with threads of moving work-forces, income and suchlike - this allows large corporations to petition for tax-breaks, subsidies and suchlike.

The only 'counter' to this realistically is for nations to do the same (ie. negotiate as a group) - the United States is already partially in this position because of the size of its economy and geographic bulk ... Europe has been heading in this direction for a while also ....

(imho its about time that corporations were reined in, making 'profit' is not the be all and end all of society - looking after the people within it and furthering man-kind IS ... somewhere along the way a lot of people appear to have forgotten that)

[Blackadar]

Taxation is as low as it has been in sixty years.

Shhhh...we don't need any facts to interfere with our misconceptions!

[ISiddiqui]

Taxation is as low as it has been in sixty years.

And its sad that so few people realize this. It's like everyone knows about inflation, but they don't actually apply it.

[JediKooter]

Wait, is it .05% or is it 5 hundredths of a cent?

[Easy Mac]

Wait, is it .05% or is it 5 hundredths of a cent?

Also known as a Financial Transaction Tax (FTT), a Robin Hood Tax is a tiny tax of about 0.05% on transactions like stocks, bonds, foreign currency and derivatives, which could raise £250 billion a year globally. FTTs are well-tested, cheap to implement and hard to avoid.

The fact that Bruce Banner can't do simple math does explain a lot about how The Hulk came to be.

[JediKooter]

The fact that Bruce Banner can't do simple math does explain a lot about how The Hulk came to be.

So this threw me off: According to a press release from the campaign, a .05 cent tax.

I didn't bother clicking on the mother jones link at first. In that link it actually says: a 50-cent tax on every $100

Your quote makes more (no pun intended) sense: a Robin Hood Tax is a tiny tax of about 0.05%

[gstelmack]

to help pay for the things we all need.

Yes, because the government is all about providing things that we NEED. Only. Or even majorly.

Not.

[Autumn]

shrug, would have cost me $500 yesterday with a move I made in an IRA account. Makes me want to vomit

If I added $500 to our IRA it would be a miracle, so allow me to say that for the large amount of people at my income level, it's hard to feel bad for you.

[SteveMax58]

Wait, is it .05% or is it 5 hundredths of a cent?

Am I having a brainfart or are these not the same number? :)

[Alf]

As I said, this was my gut reaction, maybe I'm interpreting the tax wrong, but it seems like it would have huge impacts on the market.

Isn't the goal of stock market to raise money to fund the company's future activities (investments) initially ?

I still have to understand the "I trade 25 millions shares per day". Maybe I'm too stupid, but I still don't get it. What's the aim there ?

[DanGarion]

Just to make sure everyone understands the amount we are talking about. It's a .05% tax, no 5%.

[DanGarion]

Am I having a brainfart or are these not the same number? :)

No they aren't the same, it's not like comparing 1/2" cable to .500 cable. ;)

[JediKooter]

Am I having a brainfart or are these not the same number? :)

Nope they are not the same. One is a percentage and one is an actual monetary amount.

.05% as opposed to:

.05 hundredths of a cent...not percent. Unless it was a typo and was supposed to be .05 PERcent instead of .05 cent, then yes, they would be the same. :)

[DaddyTorgo]

No problem with a financial transactions tax. Think it's a good idea actually, for reasons others have stated (discourage high-frequency trading, encourage long-term investing,etc.)

But they've fucked it by referring to it as a "Robin Hood" tax to the extent that they do.

[Danny]

We need a Doctor Who (Or Men in Black if you prefer) tax. Let's start taxing all the aliens and making them contribute their fair share if they wish to stay on planet earth.

[cadmus2166]

It'll probably never happen, since it's too f***ing brilliant.

[SteveMax58]

Nope they are not the same. One is a percentage and one is an actual monetary amount.

.05% as opposed to:

.05 hundredths of a cent...not percent. Unless it was a typo and was supposed to be .05 PERcent instead of .05 cent, then yes, they would be the same. :)

EDIT: On second glance, I'm still not following. I'm probably making an egregiously basic error here but why wouldn't 5 hundredths of a cent be the same as .05% (aka... .05 per cent)? I get that 1 is a % of a figure and the other describing a monetary value but won't they end up with the same value ultimately?

[SteveMax58]

No they aren't the same, it's not like comparing 1/2" cable to .500 cable. ;)

Yeah, I wish they'd just speak our language so we don't have to translate for them. :)

[JediKooter]

EDIT: On second glance, I'm still not following. I'm probably making an egregiously basic error here but why wouldn't 5 hundredths of a cent be the same as .05% (aka... .05 per cent)? I get that 1 is a % of a figure and the other describing a monetary value but won't they end up with the same value ultimately?

I totally understand what you're saying, but, I'm thinking it may be a typo in the original post that is causing the confusion.

From the original post:
According to a press release from the campaign, a .05 cent tax on every $100

That is a 5 hundredths of a cent (aka a Penny), tax on every 100 dollars. So you would need 19 more 5 hundredths of a cent to get to 1 penny. So you would need 1900 more dollars for a total of 2,000 dollars, just to get 1 penny of taxes out of those transactions. This doesn't seem right if you want to try to increase tax revenues. It would take 20K just to get 1 dollar in taxes.

Maybe my math is wrong, but, to me 5 hundredths of one penny (Cent) out of 100 dollars is less than .05% of 100 dollars, which if my math is correct, .05% of 100 dollars = 5 cents. If you go by percentages only: .005% of 100 dollars = .05 cents and .05% of 100 dollars = 5 cents.

I hate math so, I will gladly admit if I'm wrong. :D

[NorvTurnerOverdrive]

so.. is it 50 cents per 100? fuck i hate math.

either way, it's a reasonable idea with a lot of smart people behind it but 'stealing from the rich and giving to the poor' is a phrase that won't fly in the retard powderkeg that is american political rhetoric.

[digamma]

It's also incorrect. This is a "sales" or "use" tax. It ultimately gets passed onto the consumer, which whether you realize it or not, is you.*

*Unless you keep all of your savings under your mattress.

That's not to say it's a good or bad thing. It's just incorrect to say that it is a "small amount for the banks" as the video does.

[SteveMax58]

That is a 5 hundredths of a cent (aka a Penny), tax on every 100 dollars.

Ok, now I think I get it. So it is actually .0005% tax rate if my math is not failing me.

I think its poorly worded in that and I was reading your comment out of context with no reference to the $100. But I see what you were referring to now. Sorry...my density gets the best of me at times. :banghead:

I guess people don't like that many digits east of the decimal. I suppose similar logic to saying one half, of one percent (instead of just saying .5%).

[SteveMax58]

Dola

I'm think just about everybody else is confusing that math as well. As its nowhere close to the numbers being thrown about in this thread (not that makes it a good or bad thing itself...just confusing).

[mckerney]

<iframe width="420" height="315" src="http://www.youtube.com/embed/ANDk0SWzplo" frameborder="0" allowfullscreen></iframe>

[SteveMax58]

<iframe src="http://www.youtube.com/embed/ANDk0SWzplo" allowfullscreen="" frameborder="0" height="315" width="420"></iframe>


Thats awesome!!

[DanGarion]

No it's .05% which is the same as 5 hundredths of a percent. Think of it as $5 on every $10,000, or $1 on every $2,000, or .1 cent on every $20. (my maths was wrong on the message I deleted, because I was doing it while talking on the phone.

[SteveMax58]

No it's .05% which is the same as 5 hundredths of a percent. Think of it as $5 on every $10,000, or $1 on every $2,000, or .1 cent on every $20.

I think you're making the same error I was making now. :)

Its .05 cent, per $100. Not .05% of $100 (or any number really since its a %).

So .05 cent is .0005% of $100.

.05% of $100 = 5 cent

That original article has some horrible wording. Maybe the other articles referenced different figures but thats how I'm reading the first article in the OP.

[rowech]

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You will not find a single one of my students who doesn't understand this. Every year I tell them about the steak I got for 16 cents because on the menu the price was listed as 15.99¢ versus $15.99.

[DanGarion]

I think you're making the same error I was making now. :)

Its .05 cent, per $100. Not .05% of $100 (or any number really since its a %).

So .05 cent is .0005% of $100.

.05% of $100 = 5 cent

That original article has some horrible wording. Maybe the other articles referenced different figures but thats how I'm reading the first article in the OP.

I'm not working from the article, I'm working from the actual site and their proposed %.

[DanGarion]

From the website.
A Robin Hood Tax is a tiny tax on the financial sector that could generate billions of pounds annually to fight poverty and climate change at home and abroad. Small change for the banks - big change for those hit hardest by the financial crisis.

Also known as a Financial Transaction Tax (FTT), a Robin Hood Tax is a tiny tax of about 0.05% on transactions like stocks, bonds, foreign currency and derivatives, which could raise £250 billion a year globally. FTTs are well-tested, cheap to implement and hard to avoid.

In fact, there are already lots of different transaction taxes implemented by many countries, including in the UK. They all work on the same principle: taxing every transaction a very small amount. We think there should be a lot more of them, particularly in areas not yet taxed, like currency transactions and derivatives.

Importantly, transaction taxes are also good in that they would reduce the number of the most risky transactions, the gambling which helped to trigger the financial crisis.

[JediKooter]

Ok, now I think I get it. So it is actually .0005% tax rate if my math is not failing me.

I think its poorly worded in that and I was reading your comment out of context with no reference to the $100. But I see what you were referring to now. Sorry...my density gets the best of me at times. :banghead:

I guess people don't like that many digits east of the decimal. I suppose similar logic to saying one half, of one percent (instead of just saying .5%).

I wouldn't beat yourself up over it. :D

But I have to say yes, .05 CENTS is different than .05 PERCENT. One is an actual monetary amount, while the other is percentage of a monetary amount. (In the context of this conversation).

Ah yes, instead of just saying 'a half of a percent' or .5%. Don't get tricky with me Mr. :)

[Passacaglia]

So even the people proposing it don't know how much the tax actually *is*, and this is brilliant? Wake me up when you guys have figured it out, since this is killing the former math teacher in me.

[NorvTurnerOverdrive]

former math teacher > nobel laureate

suck it stiglitz!

[DanGarion]

I'm neither a math teacher nor a nobel laureate, but I read the website and found the percentage.

[Grover]

I'm neither a math teacher nor a nobel laureate

Perhaps you should be.

[Passacaglia]

I'm neither a math teacher nor a nobel laureate, but I read the website and found the percentage.

Who?

[Desnudo]

I don't get why? What's the rationale - communism?

[CU Tiger]

If I added $500 to our IRA it would be a miracle, so allow me to say that for the large amount of people at my income level, it's hard to feel bad for you.

Sorry...but I havent added a dime in over a year. I moved the entire thing from one investment company to another. That caused a transaction. Most people I know over say 30 have close to 100k in their retirement savings (ira/401k etc)

I never asked for you to feel bad, but I also shouldn't be penalized now for saving for the future.

Guess I should have spent eveyr peeny on a hosue i couldnt afford then get bailed out :rolleyes:

[SteveMax58]

I'm neither a math teacher nor a nobel laureate, but I read the website and found the percentage.

No, but you sir are a scholar!!

[NorvTurnerOverdrive]

This conversation will go well.
4069

[Shkspr]

Sorry...but I havent added a dime in over a year. I moved the entire thing from one investment company to another. That caused a transaction. Most people I know over say 30 have close to 100k in their retirement savings (ira/401k etc)

I never asked for you to feel bad, but I also shouldn't be penalized now for saving for the future.

Guess I should have spent eveyr peeny on a hosue i couldnt afford then get bailed out :rolleyes:

what better 100K in your IRA before age of 30 or avoiding rage at mere mention of marginally higher taxation?

[Autumn]

Sorry...but I havent added a dime in over a year. I moved the entire thing from one investment company to another. That caused a transaction. Most people I know over say 30 have close to 100k in their retirement savings (ira/401k etc)

I never asked for you to feel bad, but I also shouldn't be penalized now for saving for the future.

Guess I should have spent eveyr peeny on a hosue i couldnt afford then get bailed out :rolleyes:

I think you are very deluded if you think most people over 30 have 100k in retirement. I'm comfortable saying I know basically no one who does. I can think of a couple of distant acquaintances.

I don't doubt that most people you associate with do, and my point is that this colors one's thinking. That's part of the problem with how polarized the discussion gets, because people are unaware of what different worlds other people are coming from. I try to be aware that there are people my age in your situation, but it's certainly not the crowd I move in.

You don't have to feel guilty for having success. But maybe be grateful for what you have. If you had to pay a $500 fee on your $100,000 savings, that is not what I would call a problem, but a blessing. I feel like if the idea makes you vomit you should step back and count those blessings.

[JPhillips]

I don't get why? What's the rationale - communism?

High frequency micro-trading is little more than stealing a fraction of a cent from millions of transactions a day. Curbing that abuse would be detrimental to the balance sheets of the big investment banks, but would remove a perverse incentive to skim from otherwise honest trades.

[cuervo72]

I think you are very deluded if you think most people over 30 have 100k in retirement. I'm comfortable saying I know basically no one who does. I can think of a couple of distant acquaintances.

I've been putting into 403b/401k accounts since 1995, and I don't know if I have a ton more than that, at 38*.

* I'm sure it is more, but I don't know how much. I figure it's going to be in there for quite some time, no point in obsessing over what it is on any given day.

*Unless you keep all of your savings under your mattress.

Que?

[Autumn]

I don't get why? What's the rationale - communism?

Taxes are communism?

[Grover]

Taxes are communism?

democrats are communists?

[CU Tiger]

I think you are very deluded if you think most people over 30 have 100k in retirement. I'm comfortable saying I know basically no one who does. I can think of a couple of distant acquaintances.

I don't doubt that most people you associate with do, and my point is that this colors one's thinking. That's part of the problem with how polarized the discussion gets, because people are unaware of what different worlds other people are coming from. I try to be aware that there are people my age in your situation, but it's certainly not the crowd I move in.

You don't have to feel guilty for having success. But maybe be grateful for what you have. If you had to pay a $500 fee on your $100,000 savings, that is not what I would call a problem, but a blessing. I feel like if the idea makes you vomit you should step back and count those blessings.

A quick survey of folks I know shows that 5 of 6 couples I asked were 100k+
not a college degree in the survey.

Sorry I wouldnt call it a blessing but the reward of hard work. And yes the thought of being forced to give a penny of it to someone I dont choose to makes me pissed.

[CU Tiger]

what better 100K in your IRA before age of 30 or 4th grade spelling proficiency?

I've got two words for you, the second one is "you".

Sorry if my spelling (or more accurately typographical errors) offend you. I've discussed it here before, but its one of the drawbacks of having fingers surgically reattached and having no movement in them. Occasionally one drags a bit and if I'm not careful to go back and proof read every post Ill get some strange typos.

[molson]

I think you are very deluded if you think most people over 30 have 100k in retirement. I'm comfortable saying I know basically no one who does. I can think of a couple of distant acquaintances.

I don't doubt that most people you associate with do, and my point is that this colors one's thinking. That's part of the problem with how polarized the discussion gets, because people are unaware of what different worlds other people are coming from. I try to be aware that there are people my age in your situation, but it's certainly not the crowd I move in.

You don't have to feel guilty for having success. But maybe be grateful for what you have. If you had to pay a $500 fee on your $100,000 savings, that is not what I would call a problem, but a blessing. I feel like if the idea makes you vomit you should step back and count those blessings.

I think everybody should step back and count their blessings, I don't think there's a set financial cutoff for that. There's always people worse off than you and better off than you. Whether it be money or anything else. I'm sure there's people who look at your blessings and wonder how you can think you're in such a bad position.

Edit: And it's the age-old conflict here and throughout history, but it is possible, that people better off than you and I made some good decisions along the way. Ya, there's luck, and there's government protections, and everything else, but it's like people just love to pick that fight. Some people are going to be resentful when you insist that they were born with everything they have and emphasize the "luck" part, and while they should let it go and shrug it off, people love to pick that fight and love to get that reaction. Everybody's situation is different. I do OK but if I made a handful of different decisions in life I'd be a lot better off, or a lot worse off. No matter what, no matter how much I fucked up, I wouldn't be starving, and I'd have a roof over my head, because of blessings of circumstance, and I had a smaller margin of error than some and a greater margin of error than a lot of others. You don't know someone's situation though just from their job or how much they have in their retirement account.

[cuervo72]

I've got two words for you, the second one is "you".

Sorry if my spelling (or more accurately typographical errors) offend you. I've discussed it here before, but its one of the drawbacks of having fingers surgically reattached and having no movement in them. Occasionally one drags a bit and if I'm not careful to go back and proof read every post Ill get some strange typos.

This kinda has me wishing you had an obscene hand gesture for him rather than anything verbal.

[Shkspr]

I've got two words for you, the second one is "you".

Sorry if my spelling (or more accurately typographical errors) offend you. I've discussed it here before, but its one of the drawbacks of having fingers surgically reattached and having no movement in them. Occasionally one drags a bit and if I'm not careful to go back and proof read every post Ill get some strange typos.

In the interest of maintaining at least a degree of levity, I have altered my post to play more off of your noteworthy level of hostility at the concept. For the record, my assumption was that the typos were not caused by an actual lack of prowess at rudimentary spelling, but simply the product of posting too carelessly without bothering to proofread, a sign that too much emotion is involved to have a discussion. Like when you told me off right there? Shows much more clarity of focus. I respect and appreciate that.

I also respect how close-knit your friendships are that you can call up five couples you know in a three hour period between 9 PM and midnight and have them tell you the amount they have saved for retirement just so you can back up your point in an argument on the Internet. I know that if I were to call up my closest friends and ask them about the state of their finances, I'd get a lot of noncommittal evasions and at least one guy who wouldn't even remember the password to his account. Kudos for that. At any rate, good luck at that yacht race this weekend. ;)

[EagleFan]

Kind of what I expected to see in the thread, though I love the Verizon recording.

Now as far as the tax idea:

- Curbing the day traders in my mind helps the market.

- Curbing the high volume micros is a very good thing.

- Raising extra money SHOULD be a good thing but this is where the issues begin.

- The government has not shown us any reason to trust that they would actually use the money correctly. Sooner or later we need to see the light, that government needs a serious overhaul.

- The math is already screwed up royally in the conversion from what the idea was to what it is.

- The label was very ill-conceived.

- mother jones? seriously? Enough said...

[CU Tiger]

At any rate, good luck at that yacht race this weekend. ;)


This made me lol.

As to response FWIW Google hang outs makes that kinda shit easy to broadcast and see how many respond.

and no yachts here, though I'll never apologize for going from kicked out and homeless at 15 (grew up in gov't housing w/ a single parent) to moderately successful.

shrug im going to back out here my opinions are well known,./

[DanGarion]

No, but you sir are a scholar!!

According to NCTI I'm an Honor Scholar... ;)

[DanGarion]

Sorry...but I havent added a dime in over a year. I moved the entire thing from one investment company to another. That caused a transaction. Most people I know over say 30 have close to 100k in their retirement savings (ira/401k etc)

I never asked for you to feel bad, but I also shouldn't be penalized now for saving for the future.

Guess I should have spent eveyr peeny on a hosue i couldnt afford then get bailed out :rolleyes:

Fortunately for you the tax would have only been around $50 instead of the $500 you thought it was, but I'll take the difference.

[gstelmack]

and no yachts here, though I'll never apologize for going from kicked out and homeless at 15 (grew up in gov't housing w/ a single parent) to moderately successful.

How DARE you? How could you POSSIBLY go from that background to successful in this country? That's just not POSSIBLE. At least the media keeps trying to tell me that, I have to pay tons in taxes to help folks like that out.

[digamma]

Que?

Didn't mean to be vague. If you have any savings in a 401k or IRA, you likely have it in some sort of commingled vehicle (most likely a mutual fund, but there are others). Unless there are exemptions or exclusions, then a significant portion of this tax is going to be paid by the funds (and consequently, the fund shareholders) because of the trading activity that goes on within the funds.

That still may be an ok way to raise revenue, but it's not right to just call this a small tax on the banks.

[larrymcg421]

How DARE you? How could you POSSIBLY go from that background to successful in this country? That's just not POSSIBLE. At least the media keeps trying to tell me that, I have to pay tons in taxes to help folks like that out.

Weird strawman here. The media LOVES stories about people who struggled and still managed to make it.

And I'm pretty sure the "tons of taxes" you pay helped subsidize that gov't housing he lived in.

[Swaggs]

Weird strawman here. The media LOVES stories about people who struggled and still managed to make it.



This always makes me wonder how two of the biggest success stories of our lifetime (Bill Clinton and Barack Obama) have such difficulty connecting with those types of voters (and vice versa).

[CU Tiger]

Fortunately for you the tax would have only been around $50 instead of the $500 you thought it was, but I'll take the difference.

i just went off the article, didn't get into the math semantics

[Autumn]

I think everybody should step back and count their blessings, I don't think there's a set financial cutoff for that. There's always people worse off than you and better off than you. Whether it be money or anything else. I'm sure there's people who look at your blessings and wonder how you can think you're in such a bad position.

I do count my blessings. Which is why if I manage to sock away 100K I won't be complaining about a $500 tax on it, and why I don't complain about the tax I have to pay on the income i do make. I don't tear up the Internet when the bank adds a new fee to my account, but I'm supposed to be upset if someone else gets a new fee? No thanks. That's not class warfare, just a way to approach life.

[Autumn]

A quick survey of folks I know shows that 5 of 6 couples I asked were 100k+
not a college degree in the survey.

Sorry I wouldnt call it a blessing but the reward of hard work. And yes the thought of being forced to give a penny of it to someone I dont choose to makes me pissed.

A blessing can be the result of hard work. Being grateful for what you have doesn't nullify the fact that you worked for it. Maybe that is what hangs up so many of these discussions. When I say something like that, it doesn't mean I'm about to attack your achievements, or take them away, or demand that you give them to me. I'm just talking about a different perspective.

[sterlingice]

I love the concept myself because it would instantly return the stock market to INVESTMENTS not gambling on hugely leveraged micro-transactions.

I'm a bit saddened by not really surprised at how this thread instantly devolved into "taxes bad!" "no, rich people bad!" (and just baffled at how we ended up at 0.05% vs 0.5% vs 5%). And it's frustrating how this devolved into this rather than the nuts and bolts of why one would propose such a thing int the first place.

Ultimately we should be asking "what problem does levying the tax solve"? First thing I thought of when I saw this is that it completely changes the micro-transaction model that is bleeding a lot of 401Ks from their earning potential.

Also, I love lungs's suggestion to extend it to commodities. Tho that bubble would burst extremely quickly if micro-transactions were basically nullified. However, in the long run that would greatly help get prices of goods back in line with what they are worth, not Value(good) + Speculation(good).

Hell, I would go so far as to say that even if the government went and spent this money on hookers and blow for the Secret Service, this would be money well spent because of the effects that the taxation would have on our economy and trading abuses. We don't throw people in jail for the economic benefits and this is more a punitive measure than a tax to raise money.

It would take a few substantial but ultimately simple steps to get us back off of this new cycle of panic-driven economies but those who profit from it don't want it. It seems easier to make money going down (feed the panic and then profit by it) then when it's predictable and steady and going up.

(I sadly wish SportsDino had weighed in on this thread as he tends to have as much financial insight as anyone on this board)

SI

[NorvTurnerOverdrive]

i think we all agree with marc. but our political culture is so fucked you can't frame anything with the tagline, 'stealing from the rich and giving to the poor'

[SportsDino]

I am only a page in, but from the site literature:

The tax is 0.05%, which means a shiny nickel for every $100, not 50 cents.

I'll read everything before posting too much on individual comments, but the general idea is perfectly fine. The idea of a stock market is to provide financing and an ability to invest in equity over time with a different return pattern than a bond (by design to speculate on a share of ownership versus a share of a contract).

This tax may actually help correct a flaw that may be damaging in current markets, micro-arbitrage does not really generate equity (other than profit for the banks who run it) and often is only a sure thing when banks are front running (that is, stealing from their customers). The only 'benefit' you can claim from arbitrage is market making and liquidity, unfortunately these algorithms are more likely to give us BLACK 2PM. If I had the billion dollars and access to the right systems I could probably engineer a really fun disaster and recovery (and if I could hack the systems so it couldn't track it to me hmmm).

The tax makes as much sense as the government charging you for a toll road, or a national park fee. If the money was put towards financial transaction security and regulation it might even improve the market (for instance an easily auditable, highly secure system that prevents monster shorts from offering 10 million shares of a 1 million share company... or fining companies that break the law and pull in some of those juicy $100 million plus settlements).

Hell, any of you day traders here get away without paying any broker fees at all? I know I don't, so why not a nickle for my old Uncle Sam?

[SportsDino]

I think the idea of the tax has a lot of merit and should be implemented:

Caveats:
- The actual level of the tax as described may be too high. I think a number like 0.01% (1 cent per $100) is more appropriate for the pros mentioned below and mitigating the cons. In the Apple example mentioned earlier in the thread, (assuming no net impact on volume) that would come out to $300 million per year, paid across the transfer of about 5.4 billion shares traded.

- The first proceeds of the system should be dedicated to financial regulation and insuring the transaction system is secure and easily transparent to everyone. This will aid with the enforcement of the tax and prevent some shenanigans that I believe are currently present in the market (because we'll have the data to crack the schemes, at least in the publicly traded market).


Pros:
- The effect of a tax can have a significant downward effect on arbitrage systems. The level of the tax can be set in a way that legitimately out of sync prices are still profitable to arbitrage... so it really just slows the trades down, eventually the math can be adjusted so it will still be a somewhat significant volume.

- The impact on your average Joe is not going to be too burdensome. The cost of the transaction fee will be built into consumer trading fees no doubt, relatively it would be a small percentage compared to what most of us are actually paying already.

- Any value investor will not have a statistically significant impact on their decisions, if you don't pick a buy and hold stock to go from $20 to $50 and quibble over a 0.01% you do not deserve to be trading.

- Even your average day trader, though having a noticeable enough impact that they may slow down, will probably overall not change their strategy in any way because they can't operate at 0.01% margin speeds anyway.


Cons:

- It shouldn't be considered a massive money maker, volume will likely decrease in proportion to the size of the tax, so it will exhibit diminishing returns if it reaches a point it does have an impact on too many decisions.

- It could potentially shift more volume into unregulated markets that are not taxed such as over the counter derivatives, these are dangerous enough as it is, especially if we have any more MF Global schemes come around.

- Bigger investors will probably not like paying $100 to move each $1 million, they will try to avoid the tax as best they could (shifting trades to other exchange being the first trick).

- It might slow down mutual fund portfolio rebalancing, granted funds are increasingly abused by the banks anyway, but this is a legitimate reason to drop consumer choices like changing your portfolio from month to month. I really liked that feature back when I was poor, it lets you play the market in slow motion (mostly transitioning between cash, international, domestic, and differing equity levels... limited choice but I managed to squeak out huge percentages from changing my 401k balances during 2006-2008 to avoid the falls).


Overall, it should be implemented, not because its Robin Hood, but because its a fee that makes sense and the government should be enforcing transaction transparency in these systems anyway (and this would provide enough funds to do it). I'm of the opinion that anything that slows banks from piling on more leverage is a good idea at this point, those trillions of derivatives are down right scary, particularly in the age of the sovereign defaults.

[sterlingice]

Exactly: it's not a Robin Hood tax, it's a sin tax against microtrades.

I see two big holes in what you said but the rest seemed spot on:

1) I don't know how you fix the SEC. You have to. You can't just throw your arms up and say "it's the wild west and the market will correct itself" or you'll end up back with the boom-bust panic cycle that it seems we're heading back towards. It's sad how much of a revolving door it is: get hired, work there for a couple of years, make big bucks on Wall Street telling them how to stay clear of the SEC. Rinse, wash, repeat.

2) The ideal of any sin tax is to no collect it at all. Then the behavior is corrected and the job achieved. I don't think one should list a con of a sin tax that it will eventually go away. By design, that would be the best case scenario.

Also, as a bonus third one: dark pools of money are going to be unregulated but I don't think the microtrader is the one who takes his money and heads there. Microtraders are leeches, preying on the system, not big money makers driving it. They might find some new way to cheat or arbitrage but I don't think a speed trader is going to suddenly start playing in the CDO market.

SI

[Flasch186]

Down with Regulation!!!!! We'll self regulate!!!!


signed: A. Mozillo

wrong thread? too soon?

[mckerney]

Down with Regulation!!!!! We'll self regulate!!!!


signed: A. Mozillo

wrong thread? too soon?

If the people don't like microtrading they just won't sell their shares of stocks to microtraders!