Is Mitt running for president again?

Nope. I am in favor of a tax on what you do for a living. It wouldn't do any harm to anyone or any corporate entity, so it wouldn't bother ME one bit.

For what it is worth, these retread ideas are more of the same. The more you interfere with markets, the more you end up with messes. ... And then people like you are back in with the regulations or taxes or fixes to deal with the perceived effects of what you caused in the first place. Why not lay off of sticking your hand into everything for once, and stop dictating what is best for everyone else at the expense of who you think should be paying it (but not you)?

Those robin hood taxes have been bad news, in practice any case, no matter how you slice it. They do lead to slumps in trading volume, which means that they bring in less revenue than they are always projected to bring in. Also, less trading, means more expensive trading -- and the drop in transaction costs have been a BENEFIT to people. Also, the perception that you are punishing banks with it (not what you said, but this underlies the argument for this always--let's punish those awful banks to benefit everyone else--whether people honestly state it or not) is just wrong. Banks trade on behalf of clients -- those are individuals and companies. That includes your 401(k), which will as a result eat up more in expenses, which means millions of people have less money at retirement thanks to your "little harm done." But then you'll be in with your grand plan to fix the retirement income shortful, right? (complete with the scapegoat!)

I could go on and on about this, but it will do little to convince you -- your world view is that you know what is best for everyone (Obamacare has been a success!) regardless of the decisions they would make for themselves, and you know who to punish financially with taxes and who not to.

I personally believe that taxes should be fair -- they shouldn't single out particular people or entities for populist reasons. They should apply equally to everyone. If we have, for example, an income tax that touches everyone equally (we all should share the burden), it's certainly a legitimate discussion about how progressive it should be (and the U.S. tax code is incredibly progressive, despite the rhetoric about "fairness" that ignores all reality." Factually. ... close to half of U.S. households pay ZERO federal income tax. Almost 25 percent of Americans are on the three main welfare programs (Temporary Assistance to Needy Families, Supplemental Security Income, the Supplemental Nutrition Assistance Program), so on net that bottom quartile (at the least) pays a negative tax rate -- they take from others, they don't give. That mythical 1 percent (according to the Tax Policy Center) pays 33.4 percent of their expanded cash income (that is pretax income, so not a marginal rate, but an effective rate) in federal taxes. Yet, to hear it from some people, that relatively small percentage of people don't shoulder the burden of what taxes we actually do collecting in this country.

I don't understand why 1) we can't make efforts to live within our actual means rather than diving in deeper with the same mentality that has screwed things up over decades, and 2) Why the solution to trying to raise more money to pay for all of your wonderful ideas is to "bleed that guy over there."

But since that is the way you think, I propose instead, a cranberry transaction tax. We'll tax just the way you, in particular, commute to work every day, and we'll tax all of the transactions you have to make in the course of a day to do your job. If it drives up the costs of what you do and you are out of a job, not to worry -- there was little harm to anyone or any corporate entity. I read it on a message board from a guy who knows best how to centrally manage things.

 

Unless you want something simplistic that misses most of the true financial harm done by that tax (which you blithely always assume is negligible without any clue, and which we can't anticipate to any reasonable degree until you've already screw things up and created a more inefficient marketplace), that isn't my job. It's way more complicated than you seem to believe. We have a tax code already with these hamhanded taxes that has created economic inefficiencies (and side effects people like you didn't anticipate when it was no big deal) that we all suffer from -- in endless ways. Enough already.

It *will* drive up transaction costs, even if I can't quantify something that big and anticipate all the effects and to what degree. But that is the reason NOT to screw around with something you don't understand. It will also created costly economic inefficiencies. I don't want to find out how much, or what other negative effects it has on markets in the form of instability. My world shouldn't be your shortsighted experiment.

Unless transaction costs to trade don't have an effect on supply and demand or are inelastic (and this isn't true -- and this has been borne out, for example, in places like Italy and Taiwan), it will mean that you have now skewed a variety of markets making it more costly for all of the participants. Less liquidity, which means wider bid-ask spreads and lower trading volumes, which means the markets themselves are less efficient, which means beyond the actual costs in transaction fees, it means worse pricing in those markets for people trading -- which could potentially be very costly. You have no clue to what degree it will cost people in secondary effects and in terms of market instability, so it is incumbent on you to explain why we need to screw around with people's financial well being, not for me to convince you not to do your experiment. Less liquidity also means that the tax itself will derive less revenue than you are probably assuming (estimates used to sell this idea in other places used pre-tax trading volumes, which ALWAYS way overestimated the amount of revenue).

So what will you get? A less efficient market that now leaks money that comes out of actual people's pockets, and drives up volatility, caused by a tax that brings in less money than you projected.

No thanks.

For what it is worth, that tax will degrade the accumulated savings (by taking money that could compound) 0f anyone with a mutual fund. That is just ONE practical effect of it that anyone on here with a retirement account should bristle against. Forget the extra fraction of percent that gets passed along to you. That efficient transaction that got the guy managing your fund great pricing that we didn't see 20 years ago is now LESS efficient. Which hits your returns.

It will also disproportionately penalize *me* for no good reason -- I traded at least 1,000 (Probably way more if I kept track of that soft or thing) futures contracts last year, for example, and no, I don't need you screwing up some of those markets that, as is, aren't liquid enough for my liking by widening the bid-ask spreads on me. That is real money out of my pocket. You also will be creating more market volatility without realizing it (even though some people advocating this nonsense ignorantly try to suggest the opposite).

No thanks.

 

Here is the deal. ... The depth of reasoning cranberry gave me is, "It is a fraction of a percent tax. It won't devastate anyone."

I can't respond to that that simplistically, without something equally short on reasoning. It goes way beyond what he isn't seeing, in my view. And it is why an "example" of the harm is difficult. I can't flesh out something this complicated in any detail. But there WILL be effects.

Take the market for silver (off the top of my head), which has a lot of industrial uses. It gets used in consumer electronics and appliances, for example. Silver also has the qualities of a currency also, though -- it is the "poor man's gold," which makes it sensitive to currency fluctuations, too. Which makes the supply / demand dynamics difficult. It is actually pretty difficult to trade for most people.

The futures market for silver is extremely volatile already, but in relatively low periods of volatility, the bid/ask spread can widen -- that is as things are already. Liquidity goes away when silver isn't in play.

Let's say you impose your "negligible" tax. Are you anticipating this possible (and I'd suggest way more likely than you realize) effect: 1) The tax eats away at some of the liquidity in that market. I can't say to what degree (and neither can cranberry), but I'd argue we shouldn't be screwing around with something like this. But let's say it takes some speculators (who serve a vital purpose) out of that market. 2) As a result, the bid / ask spreads widen out even more at times. 3) The company that made the contacts in electrical switches that are in endless devices you own (from your iPad to your refrigerator to your auto) now is getting less efficient pricing than it could with more liqudity (as markets have become more efficient due to technology, it has actually stemmed a degree of consumer price inflation, despite every effort to stoke higher consumer prices). 4) The price for all of those devices everyone owns goes up as a result, taking money out of people's pockets.

My question: are you anticipating anything like that (as well as a zillion other permutations of it) when you tell me that tax has little effect on anyone?