tag:blogger.com,1999:blog-8529580665294663953.post7805909566740139574..comments2023-10-27T04:26:57.609-07:00Comments on InvestorCentric: Why We Don't Need A Financial Transaction TaxNuWire Investorhttp://www.blogger.com/profile/02512928198926080436noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-8529580665294663953.post-26091986071403551582009-09-04T11:12:32.253-07:002009-09-04T11:12:32.253-07:00I hope politicians know that there are over 100 mi...I hope politicians know that there are over 100 million Investor Class voters.<br /><br />For those seeking revenge: The large institutions that were recently bailed out will be exempt from this tax as they are in the UK. If not exempt, they have the means to find a creative way to avoid it. Only the average investor will be left paying this tax, same as they do in the UK. Small trading firms will fail as this tax will be way too expensive. Brokerage fees from reduced competition will increase substantially as a result of these failures. Mutual funds will pass the cost on to investors as a result of reduced yield. Liquidity will be reduced by 90%. That means stock investors, or an investor's fund manager, will be paying 50 cents per share instead of the current 1 or 2 cents. All that and more plus the actual tax will cost at least 1% lower gain annually. The funny part is you will pay this tax even if you have a loss for each year. Of all things, a tax on losses. The greatest loss is from reduced compounding. Find a retirement calculator and compare a 1% difference in annual yield, and you will lose one third of your retirement to this tiny tax over a lifetime of investing.<br /><br />Sweden tried this tax by demand of the citizens for a only a few years as the people found out how much this tax really cost them. Up to 90% of financial activity moved out of Sweden. I don't remember if it ever recovered after the tax was abolished.<br /><br />Proponents of this tax claim hundreds of billions in revenue will be gained annually. The Independent Budget Office of New York City determined that a much smaller transaction tax would result in net negative revenue. The higher the tax, the lower the revenue with hundreds of thousands of jobs lost, most of them not even directly related to finance.<br /><br />The Canadian government's Staff of the Parliamentary Research Branch did a comprehensive study on the transaction tax in several other countries that actually still have or had the tax. Conclusion of their study: "Sweden, on the other hand, appears to be a classic example of an experiment gone wrong, while Germany, like many other countries, has decided that the costs outweigh any benefits from this type of tax." <br /><br />There are only about 12 countries that still have this antiquated tax and most of them have recently lowered, abolished or are considering abolishing the tax as it has been a complete failure. The US had the transaction tax until the LBJ administration abolished it in 1966. We had the trans tax during the 1929 crash. Some proponents claim the tax will prevent crashes. What happened in 1929? Maybe the tax is a big reason why it took decades for the market to recover.TAXPREYhttps://www.blogger.com/profile/13554508091874589033noreply@blogger.com