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For the application of sales tax to all purchases including stock and the abolition of capital gains tax. give vertically integrated businesses an edge Why is

by causi 3y ago

For the application of sales tax to all purchases including stock and the abolition of capital gains tax. give vertically integrated businesses an edge Why is that bad? Vertical integration allows the more efficient use of resources.

gruez 3y ago
> For the application of sales tax to all purchases including stock So you want to make financial transactions more expensive and make the market less liquid? What good can come of this? >and the abolition of capital gains tax. What justification is there to tax someone buying $500 stocks and later selling it for $1000 the same as someone buying $1000 worth of stocks and selling it for $500? Taxing buying $500 worth of TVs makes sense, because it's presumably consumed, but it doesn't make sense for financial instruments. >Why is that bad? Vertical integration allows the more efficient use of resources. Companies already reap the savings from vertical integration. I'm not sure why the government should give them additional incentive to vertically integrate. Suppose the tax rate is 10% and we have two supply chains, one that's vertically integrated and the other that's not vertically integrated. Suppose further that both are equally efficient (which is plausible, given that nimble firms can outcomplete big conglomerates). Why should the government penalize the non-vertically integrated supply chain to the order of 10%?
- anigbrowl 3y ago
  So you want to make financial transactions more expensive and make the market less liquid? What good can come of this? Fewer stock market bubbles, less asset inflation.
  - gruez 3y ago
    Market bubbles aren't caused by stocks trading back and forth. They're caused by irrational exuberance and macroeconomic factors.
    - anigbrowl 3y ago
      People are less likely to be irrationally exuberant if there's an up-front cost to trading, no? Having to write a check (to to speak) to the government feels like real money, as opposed to the fantasy of sure-thing future profits that naive margin traders and property flippers may kid themselves into.
      - gruez 3y ago
        >People are less likely to be irrationally exuberant if there's an up-front cost to trading, no? Stock bubbles promise to return your investment several-fold. See: stocks like Tesla or even Zoom (during the pandemic). A 10% tax isn't going to dissuade anyone from the prospect of making 500%. It will dissuade someone from buying broad-market ETFs or mutual funds that return on the order of 5-8% a year.
        anigbrowl 3y ago
        I don't see why. Nobody buys an ETF to make a fast buck, they buy ETFs to just sit there and compound at low risk.
        gruez 3y ago
        People already have trouble stashing away money in favor of immediate consumption. Forcing them to take a loss of 10% immediately upon investment basically makes saving much less attractive, especially if their future is uncertain. If for whatever they had to liquidate their investment they'd suffer a loss of 20% before any gains.

by causi 3y ago

gruez 3y ago

> For the application of sales tax to all purchases including stock So you want to make financial transactions more expensive and make the market less liquid? What good can come of this? >and the abolition of capital gains tax. What justification is there to tax someone buying $500 stocks and later selling it for $1000 the same as someone buying $1000 worth of stocks and selling it for $500? Taxing buying $500 worth of TVs makes sense, because it's presumably consumed, but it doesn't make sense for financial instruments. >Why is that bad? Vertical integration allows the more efficient use of resources. Companies already reap the savings from vertical integration. I'm not sure why the government should give them additional incentive to vertically integrate. Suppose the tax rate is 10% and we have two supply chains, one that's vertically integrated and the other that's not vertically integrated. Suppose further that both are equally efficient (which is plausible, given that nimble firms can outcomplete big conglomerates). Why should the government penalize the non-vertically integrated supply chain to the order of 10%?

anigbrowl 3y ago
So you want to make financial transactions more expensive and make the market less liquid? What good can come of this? Fewer stock market bubbles, less asset inflation.
- gruez 3y ago
  Market bubbles aren't caused by stocks trading back and forth. They're caused by irrational exuberance and macroeconomic factors.
  - anigbrowl 3y ago
    People are less likely to be irrationally exuberant if there's an up-front cost to trading, no? Having to write a check (to to speak) to the government feels like real money, as opposed to the fantasy of sure-thing future profits that naive margin traders and property flippers may kid themselves into.
    - gruez 3y ago
      >People are less likely to be irrationally exuberant if there's an up-front cost to trading, no? Stock bubbles promise to return your investment several-fold. See: stocks like Tesla or even Zoom (during the pandemic). A 10% tax isn't going to dissuade anyone from the prospect of making 500%. It will dissuade someone from buying broad-market ETFs or mutual funds that return on the order of 5-8% a year.
      - anigbrowl 3y ago
        I don't see why. Nobody buys an ETF to make a fast buck, they buy ETFs to just sit there and compound at low risk.
        gruez 3y ago
        People already have trouble stashing away money in favor of immediate consumption. Forcing them to take a loss of 10% immediately upon investment basically makes saving much less attractive, especially if their future is uncertain. If for whatever they had to liquidate their investment they'd suffer a loss of 20% before any gains.