Financial Transaction Tax, Anyone?

[Beingist]

Since the Occupation movement started, there has been some suggestions floating around the country (U.S.) about either a Financial Transaction Tax, or a "Tobin Tax".

Apparently, the idea was proposed in Europe back in September, and today, two Democratic Senators plan to introduce the measure in the U.S.

Just want to know what everyone thinks about this. I'm on the fence, still. It sounds like a great idea in principle, but I suspect, as with every other tax, and considering the nature of business, it will only get passed on to consumers in the end.

So, whatcha think?

[Spinoza]

Originally Posted by Beingist

Since the Occupation movement started, there has been some suggestions floating around the country (U.S.) about either a Financial Transaction Tax, or a "Tobin Tax".

Apparently, the idea was proposed in Europe back in September, and today, two Democratic Senators plan to introduce the measure in the U.S.

Just want to know what everyone thinks about this. I'm on the fence, still. It sounds like a great idea in principle, but I suspect, as with every other tax, and considering the nature of business, it will only get passed on to consumers in the end.

So, whatcha think?

Why does it sound like a great idea in principle?

[SnerpGoodWord]

It's the worst possible financial idea - history shows that financial transaction taxes simply drive business elsewhere. The only people who end up paying are those who are captive to the county in question - those too poor or financially unsophisticated to take their business overseas. AKA the lower and middle class.

So if you want to stick it to middle class investors, a financial transaction tax is great. Otherwise, it's a bad idea.

The failure of the Swedish transaction tax is a perfect case study.

[Beingist]

Originally Posted by SnerpGoodWord

So if you want to stick it to middle class investors, a financial transaction tax is great. Otherwise, it's a bad idea.

The failure of the Swedish transaction tax is a perfect case study.

I see the point, although I think there's a difference between investors and speculators. But, thanks for noting the Swedish experiment.

[SnerpGoodWord]

Originally Posted by Beingist

I see the point, although I think there's a difference between investors and speculators.

There is certainly a difference - speculators are interested in price while investors are interested in yield.

That said, you can't have efficient investment without the availability of speculation on both sides with inventory in order to make a market. And since market making speculators will not take a loss in the long run, any taxes levied on them with manifest either as wider bid/offer spreads or via them exiting (and thus closing down) the market. In the case of Sweden you got the later.

[Curtis2011]

In general I am against new taxes, whatever form they may take.

IMO, if the government can't spend within its means while taking in 2.6 trillion dollars a year in revenue, then giving them more money is not going to fix the problem.

[SnerpGoodWord]

One other interesting note from Sweden is that the revenue lost from capital gains and income taxes on their stock market was orders of magnitude bigger than what they took in on their financial transaction tax. It was an obvious case of killing the goose that laid the golden egg.

[MariconesUnited]

Originally Posted by Curtis2011

In general I am against new taxes, whatever form they may take.

IMO, if the government can't spend within its means while taking in 2.6 trillion dollars a year in revenue, then giving them more money is not going to fix the problem.

The US is in a very very deep debt problem. You have 2 possible solutions, either you increase revenue or you cut expenses. I think it needs to do both at this time honestly. Cutting government expenses is very difficult to do however. It's not popular when put in practice.

In this particular instance I think this is a good idea. Europe is doing it as well, so there will be less incentive for the upper classes to go elsewhere. They should do it wherever possible ideally speaking. I don't see why investors and speculators should be exempt from paying taxes when buying and selling products. Everyone else does it why not them?

[Peterw]

Originally Posted by Curtis2011

In general I am against new taxes, whatever form they may take.

IMO, if the government can't spend within its means while taking in 2.6 trillion dollars a year in revenue, then giving them more money is not going to fix the problem.

I'm in this camp as well. The answer to government's inability to manage their finances sensibly is not to give them more money.

Also the answer to massive excesses in the finance industry vs horrendous poverty in other parts of the world and inequality in developed nations is not to give more money to governments.

IMO not nearly enough press is given to the philanthropic activities of financial institutions and the charitable activities of the rich. It's an inconvenient truth that a lot of people either filter out just aren't aware of, probably due to media reporting.