Would you still trade if he managed to pass his tax bill? A 0.5% tax on each trade.
if Bernie wins the election, that will be the least of your worries…
Even Bloomberg is advocating a transaction tax–of 0.1% per transaction. As for me, I’d still trade, definitely, just not as frequently. And I doubt that these transaction taxes would apply to retirement accounts.
A small tax on security trades would kill the robo traders, it will not stop my investment strategy which is mainly ETF based.
Also it would be interesting to see how well Renaissance Technologies’ flagship fund would perform in such an environment if they have to pay a transaction tax on the billions of trades they do. I guess the lights will go out then.
That would certainly put a damper on HFT and day trading for the most part. I’m not sure what his plan for derivatives are but I can’t imagine it would be favorable. Being Canadian I don’t follow the campaign trail as much as I likely should because I split my investments between CAN/US.
Of course I would still trade.
Bloomberg has also proposed such a tax at 0.1% or 0.2% it appears. The concept has support from Buttigieg and Warren also, and it has been used in some markets abroad. I suspect it would only apply to sells (giving a appearance of not harming long term investors as much). Given the massive increase in the federal deficit despite a strong economy, due to the recent tax rate cuts, such measures become more likely.
I would continue to invest / trade.
If HFT becomes unprofitable, about 75% of trading volumes would disappear. You can expect interesting times in the market.
The impact on me most likely won’t be felt on the tax itself, it will be felt on the bid/ask deltas.
I’m unfamiliar with any proposals, but impact on liquidity would be a big concern. I don’t understand the benefit of taxing a transaction vs. just taxing any potential gain itself?
Yeah isn’t this double taxation? You get taxed on the proceeds and get taxed even if you lose or break even.
It’s an awful idea. If their intention is to stop HFT, there has to be better options.
I would assume if implemented the transaction fee would go into your basis, so capital gains, if any, would be reduced by the amount of the fee. I guess I fail to see any benefit from reduced liquidity however. Much of a stock’s value is tied up in it’s liquidity.
Yeah. Would definitely widen bid/ask spreads. Nothing says you can’t double-tax. If they wanted to kill HFT and day trading you could easily add a tax for holdings of less than a day. It is debatable how helpful HFTs really are for liquidity in reality. A lot of times they sit out during market turmoil when you really need the bid.
Most taxes are double taxes. Pay income tax on your employment income, then use that income to buy something and pay sales tax. Capital gains tax on an investment in a company that is paying corporate income tax on its earnings. Then they dividend you some of that after-tax income and you pay a dividend tax on it.
Want to buy a home with your after-tax employment income? Pay some property tax too.
The fact that it is common in almost all countries to tax sales regardless of the profit made - often even several times - does not make it better. It is a shame and anti-social: the poorer pay proportionately more taxes here than the rich.
Matthias
Mr @duckruck, sir!
Recently you have dug up a substantial number of posts from the past here on P123 that have proved highly interesting. Thank you! 