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Absolutely! Which is why a transactional / tobin tax wouldn't hurt such folks as they will be trading infrequently. https://en.wikipedia.org/wiki/European_Un

Absolutely! Which is why a transactional / tobin tax wouldn't hurt such folks as they will be trading infrequently. https://en.wikipedia.org/wiki/European_Union_financial_transaction_tax https://en.wikipedia.org/wiki/European_Union_financial_trans...

Frondo 11y ago
And it's funny, New York already has such a law on the books: http://www.thenation.com/article/why-cuomo-leaving-wall-street-cash-table/ http://www.thenation.com/article/why-cuomo-leaving-wall-stre... The tax is instantly rebated since 1981 (thanks, Reagan-era politicians!), so no money around this tax ever changes hands. It seems like it could be an interesting place to start looking as a model for a federal-level tax on financial trading.
- blazespin 11y ago
  Yeah, but I'm not naive enough to think this will get passed soon. The problem with the US is that its manufacturing base has been so hollowed out it has become reliant on its treasury bonds + QE money printing fed (backed by its military) and financial hegemony (think Goldman Sachs) that results from it. The ftt got passed in the EU because Germany (which runs the EU, mostly) actually still makes things. They don't need the world to transact their bonds in order to stay liquid.
  - dantillberg 11y ago
    I was curious about this conjecture that the US doesn't make things, while Germany does. So I dug up [0], a table of "Manufacturing, value added (current US$)", and here are the top five countries for 2013: 1: China $2.9bn, 2: United States $1.9bn, 3: Japan $904m, 4: Germany $745m, 5: Korea $368m Manufacturing in Germany may contribute a higher percentage of GDP, but it does not appear to have a larger (in dollars, according to this data) manufacturing base than the US in absolute terms. [0]: http://data.worldbank.org/indicator/NV.IND.MANF.CD?order=wbapi_data_value_2013+wbapi_data_value&sort=desc http://data.worldbank.org/indicator/NV.IND.MANF.CD?order=wba...
    - deleted 11y ago
      [deleted]
    - jazzyk 11y ago
      It would be hard to expect Germany to produce more in absolute terms, with Germany's population being 25 % of US population (US=320M, Germany=80M). With its population 4x higher, the US only produces 2.5x more stuff. That's a huge difference.
      - kasey_junk 11y ago
        It's a huge difference but it isn't particularly telling about any larger points. A large component of US output is agricultural or natural resources which are not included in that number (nor is software for that matter).
tptacek 11y ago
To the extent transactional taxes retard market-making and drive spreads back towards where they were in the 1980s, those taxes do in fact harm retail investors.
- vasilipupkin 11y ago
  Sweden tried it and had to go back on this due to liquidity drying up. By the way, we already have transaction taxes in the US. That's how we fund the SEC and CFTC. Every sale of stock is charged an SEC fee. The issue is, if you set these fees too high, then you will in fact harm investors by reducing liquidity.
  - blazespin 11y ago
    Sweden's fee was probably a bit high. They also were too small to implement it and didn't discourage the use of foreign brokers enough.
- blazespin 11y ago
  Unless you're trading way more frequently than you need to be, the spread is hardly a big deal. If you are trading frequently, than the spread is an opportunity to make money. As someone who trades a lot, I like fat spreads. My advice to any retail investor though is just dollar cost average into an index fund as a function of your age and forget about it. If you are going to try to 'beat the market' (and worry bout things like transaction taxes and spreads) you will lose. When people talk about retail traders in this conversation, they are either totally clueless or working in the industry and just don't want to be taxed. Anyone who says a retail trader should be trading enough to worry about spreads is not your friend.
  - tptacek 11y ago
    "Retail trading" here being a term capturing all trading done on behalf of normal people, including pension and mutual funds. So no, that argument very much does not carry.

Frondo 11y ago

And it's funny, New York already has such a law on the books: http://www.thenation.com/article/why-cuomo-leaving-wall-street-cash-table/ http://www.thenation.com/article/why-cuomo-leaving-wall-stre... The tax is instantly rebated since 1981 (thanks, Reagan-era politicians!), so no money around this tax ever changes hands. It seems like it could be an interesting place to start looking as a model for a federal-level tax on financial trading.

blazespin 11y ago
Yeah, but I'm not naive enough to think this will get passed soon. The problem with the US is that its manufacturing base has been so hollowed out it has become reliant on its treasury bonds + QE money printing fed (backed by its military) and financial hegemony (think Goldman Sachs) that results from it. The ftt got passed in the EU because Germany (which runs the EU, mostly) actually still makes things. They don't need the world to transact their bonds in order to stay liquid.
- dantillberg 11y ago
  I was curious about this conjecture that the US doesn't make things, while Germany does. So I dug up [0], a table of "Manufacturing, value added (current US$)", and here are the top five countries for 2013: 1: China $2.9bn, 2: United States $1.9bn, 3: Japan $904m, 4: Germany $745m, 5: Korea $368m Manufacturing in Germany may contribute a higher percentage of GDP, but it does not appear to have a larger (in dollars, according to this data) manufacturing base than the US in absolute terms. [0]: http://data.worldbank.org/indicator/NV.IND.MANF.CD?order=wbapi_data_value_2013+wbapi_data_value&sort=desc http://data.worldbank.org/indicator/NV.IND.MANF.CD?order=wba...
  - deleted 11y ago
    [deleted]
  - jazzyk 11y ago
    It would be hard to expect Germany to produce more in absolute terms, with Germany's population being 25 % of US population (US=320M, Germany=80M). With its population 4x higher, the US only produces 2.5x more stuff. That's a huge difference.
    - kasey_junk 11y ago
      It's a huge difference but it isn't particularly telling about any larger points. A large component of US output is agricultural or natural resources which are not included in that number (nor is software for that matter).

tptacek 11y ago

To the extent transactional taxes retard market-making and drive spreads back towards where they were in the 1980s, those taxes do in fact harm retail investors.

vasilipupkin 11y ago
Sweden tried it and had to go back on this due to liquidity drying up. By the way, we already have transaction taxes in the US. That's how we fund the SEC and CFTC. Every sale of stock is charged an SEC fee. The issue is, if you set these fees too high, then you will in fact harm investors by reducing liquidity.
- blazespin 11y ago
  Sweden's fee was probably a bit high. They also were too small to implement it and didn't discourage the use of foreign brokers enough.
blazespin 11y ago
Unless you're trading way more frequently than you need to be, the spread is hardly a big deal. If you are trading frequently, than the spread is an opportunity to make money. As someone who trades a lot, I like fat spreads. My advice to any retail investor though is just dollar cost average into an index fund as a function of your age and forget about it. If you are going to try to 'beat the market' (and worry bout things like transaction taxes and spreads) you will lose. When people talk about retail traders in this conversation, they are either totally clueless or working in the industry and just don't want to be taxed. Anyone who says a retail trader should be trading enough to worry about spreads is not your friend.
- tptacek 11y ago
  "Retail trading" here being a term capturing all trading done on behalf of normal people, including pension and mutual funds. So no, that argument very much does not carry.