View Full Version : New tax on the stock market

09-02-2009, 07:13 PM
Well, that's what the cREPs on CNBC are calling it.

Someone has proposed a minuscule tax on purchases of stocks--tiny tiny fractions of a penny per dollar value of the trade. I'm sure Google could tell us the exact rate but it's something like .00001 cents per dollar.

The tax would have absolutely no impact on long term investors, a little more impact on folks who do a lot of trading, and a little more impact on day traders. Considering the amount of stocks that are traded daily it won't take much to raise a whole lot of money. A side benefit would be to force the day traders (and the hour-traders) to moderate their behavior. I truly believe people who use the high-tech tools available today to buy and sell massive quantities of stocks based solely on technical analysis and minute moves are ripping true investors off. They don't care about quality, all they care about is volatility. They don't look for quality, volatility will make them wealthy if they have the right high-tech tools and trust in the Elliot Wave theory.

Buying stocks is an optional behaviour not unlike smoking tobacco or drinking alcohol. Since this adminstration is determined to balance the budget--eventually--why not levy a tax on stock purchases?

09-02-2009, 07:17 PM
My question is this going to apply to the high speed microsecond trades by Goldmans and the other big houses? I posted about that before with when one of their employees absconded with the software. Not a thing heard since.

I get the feeling its not.

09-02-2009, 07:22 PM
It would--should--apply to all trades.

George Roberts
09-02-2009, 09:04 PM
Increasing the cost of trading is certainly good.

Keith Wilson
09-03-2009, 06:58 AM
Well, if you or I buy a box of nails or a can of paint, we pay sales tax in almost every state, something between 4% and 8% usually. I think a little damping on the speed of trading (not too much) would be an excellent idea.

Milo Christensen
09-03-2009, 07:09 AM
. . . we pay sales tax in almost every state, something between 4% and 8% usually. . . .

I can't help but think of the few states that don't have a sales tax, or the many states where there is a significant difference between one state and the neighboring state and the huge mega-complexes of retail just over the border in the lower tax state.

So, to save a few bucks, we start doing trading in an overseas exchange. It's not like we have to trade here, is it?

09-03-2009, 07:15 AM
I have to agree with Keith on this one as it is constitutional and makes complete sense. Like I said my doubts are if and when it gets through will the institutional traders get a pass. I have no problem with sales tax or tariffs its taxing a mans labor I have issue with. It must be apportioned or it is unconstitutional. If the weakest man cannot bear it, it doesn't fly.

John of Phoenix
09-03-2009, 09:53 AM
There is currently a small fee on the sale of stock. And I do mean small, 50 cents on a $20,000 transaction. It's purpose...

Section 31 of the Securities Exchange Act of 1934 (Act) requires FINRA and
the national securities exchanges to pay transaction fees and assessments
to the Securities and Exchange Commission (SEC). The fees are designed to
recover the costs related to the government’s supervision and regulation of
the securities markets and securities professionals.
Sounds like this new one would cover the purchase side. Did they give any indication what this fee would be used for?

09-03-2009, 12:03 PM