Wall Street Tax Act 2019

Mar 2012
57,883
39,438
New Hampshire
#1
Just heard a clip from Joe Biden, who says this will hurt the middle class since it targets the big traders that run the 401Ks, pensions, etc.

House Democrats are introducing their proposal of a financial transaction tax on stock, bond and derivative deals, and this time they've signed on a key new supporter: left-wing firebrand Rep. Alexandria Ocasio-Cortez.

Rep. Peter DeFazio, D-Ore., is leading the effort to bring back a bill, titled the "Wall Street Tax Act of 2019," which slaps a tax on securities transactions and could have a particular negative effect on high-frequency traders. Ocasio-Cortez, D-N.Y., is the lead co-sponsor. DeFazio is expected to file the bill on Tuesday.

"This option would increase revenues by $777 billion from 2019 through 2028, according to an estimate by the staff of the Joint Committee on Taxation," the Congressional Budget Office's website says. "The tax on financial transactions would reduce taxable business and individual income."

House Dems are reintroducing a financial services tax with Alexandria Ocasio-Cortez as a co-sponsor
 
Likes: Madeline
Jun 2014
61,605
35,955
Cleveland, Ohio
#2
Just heard a clip from Joe Biden, who says this will hurt the middle class since it targets the big traders that run the 401Ks, pensions, etc.

House Democrats are introducing their proposal of a financial transaction tax on stock, bond and derivative deals, and this time they've signed on a key new supporter: left-wing firebrand Rep. Alexandria Ocasio-Cortez.

Rep. Peter DeFazio, D-Ore., is leading the effort to bring back a bill, titled the "Wall Street Tax Act of 2019," which slaps a tax on securities transactions and could have a particular negative effect on high-frequency traders. Ocasio-Cortez, D-N.Y., is the lead co-sponsor. DeFazio is expected to file the bill on Tuesday.

"This option would increase revenues by $777 billion from 2019 through 2028, according to an estimate by the staff of the Joint Committee on Taxation," the Congressional Budget Office's website says. "The tax on financial transactions would reduce taxable business and individual income."

House Dems are reintroducing a financial services tax with Alexandria Ocasio-Cortez as a co-sponsor
It is a weird tax. It's a type of sales tax, rather than the traditional capital gains/income tax. Ergo, arguably it is regressive except.....

The poor don't buy stocks.

Wonder if this apply to the sale of bonds, derivatives, commodities, etc.? Tax-free bonds as well?

It'll impact the value of these intangible assets, if so.
 
Mar 2012
57,883
39,438
New Hampshire
#3
It is a weird tax. It's a type of sales tax, rather than the traditional capital gains/income tax. Ergo, arguably it is regressive except.....

The poor don't buy stocks.

Wonder if this apply to the sale of bonds, derivatives, commodities, etc.? Tax-free bonds as well?

It'll impact the value of these intangible assets, if so.
Yea I am not sure how exactly it would work. Its true that the poor dont have stocks but from what I understand it will impact anyone that has a 401K, pension or retirement plan. Some of the moderates were greatly concerned that the big house trade companies will pass it off to the average Joe.
 
Likes: Madeline
Jun 2014
61,605
35,955
Cleveland, Ohio
#4
Yea I am not sure how exactly it would work. Its true that the poor dont have stocks but from what I understand it will impact anyone that has a 401K, pension or retirement plan. Some of the moderates were greatly concerned that the big house trade companies will pass it off to the average Joe.
One hallmark of a good tax is, it has very little impact on economic choices made by taxpayers and others.

E.g., many pundits believe the deduction for a dependent child, child care credit, etc. are bad tax law because they incentivize people to become parents, which should not be a choice influenced by tax law.

If this law is adopted and applies only to stocks, it will influence investors to buy bonds, etc., instead. Not by much, but not by no degree of changed investment behavior.

Worse, lawyers for publicly traded companies will dream up new or improved intangible asset forms that LOOK and perform just like stock, and yet are not stock. Ergo, trading these other intangible assets will not be a taxable event.

So, you try to apply the tax to every intangible asset. But apart from other serious problems, lawyers will design products that are not, strictly speaking, intangible. Such as, you get a 1/5000th interest in Amazon AND a square foot of some cornfield in Iowa.

It's not that this tax can't effectively raise tax revenues. It's that the degree of economic displacement it will inspire may not be worth it.

It'd be so much easier to raise the capital gains rate. Maybe that's politically impossible, but this wall street trading tax makes me nervous.

We have the greatest economic engine in human history. We should be hesitant to interfere with that outside preventing fraud and other behavior that undermines confidence in that engine.
 
Last edited:
Jun 2014
61,605
35,955
Cleveland, Ohio
#5
Arguably, it would be better to tax the income of investment houses like E-trade. Tied to the trades they make, maybe all to the assets they manage. Imposed in ways that make it hard to pass that expense to customers.

But most stocks are held by institutional investors directly. There's no intermediary like E-trade to tax.
 

Blueneck

Former Staff
Jun 2007
55,137
42,572
Ohio
#6
Just heard a clip from Joe Biden, who says this will hurt the middle class since it targets the big traders that run the 401Ks, pensions, etc.

House Democrats are introducing their proposal of a financial transaction tax on stock, bond and derivative deals, and this time they've signed on a key new supporter: left-wing firebrand Rep. Alexandria Ocasio-Cortez.

Rep. Peter DeFazio, D-Ore., is leading the effort to bring back a bill, titled the "Wall Street Tax Act of 2019," which slaps a tax on securities transactions and could have a particular negative effect on high-frequency traders. Ocasio-Cortez, D-N.Y., is the lead co-sponsor. DeFazio is expected to file the bill on Tuesday.

"This option would increase revenues by $777 billion from 2019 through 2028, according to an estimate by the staff of the Joint Committee on Taxation," the Congressional Budget Office's website says. "The tax on financial transactions would reduce taxable business and individual income."

House Dems are reintroducing a financial services tax with Alexandria Ocasio-Cortez as a co-sponsor
"High frequency traders" aren't people, they're algorithms.

High-frequency trading - Wikipedia

Slowing that down might be a good idea.
 
Likes: Madeline

Blueneck

Former Staff
Jun 2007
55,137
42,572
Ohio
#7
It is a weird tax. It's a type of sales tax, rather than the traditional capital gains/income tax. Ergo, arguably it is regressive except.....

The poor don't buy stocks.

Wonder if this apply to the sale of bonds, derivatives, commodities, etc.? Tax-free bonds as well?

It'll impact the value of these intangible assets, if so.
The middle class does. My neighbor makes a living playing the Forex market. My nephew did it for a while too. He also had an E-trade account and traded stocks, although his instincts weren't very good. My sister and I were right in our forecasts more than he was.

Anyway, I'd rather leave small day traders (trading their own money) alone, but I imagine if this tax goes through it will probably be paid by them and the institutional investors will be exempt.
 
Jun 2014
61,605
35,955
Cleveland, Ohio
#8
"High frequency traders" aren't people, they're algorithms.

High-frequency trading - Wikipedia

Slowing that down might be a good idea.
We do need a massive infusion of tax revenues to pay for universal care. Without a new tax, or a vastly reformed existing tax, there's no hope for this progressive policy because there's no way to pay for it.

Targeting intangible assets is not a bad idea. It's probably the only viable idea. But Jeeze Louise, the need for economic geniuses to design it is clear, and instead, we have 28 year old shopgirl AOC, etc. running the project.
 
Jun 2014
61,605
35,955
Cleveland, Ohio
#9
The middle class does. My neighbor makes a living playing the Forex market. My nephew did it for a while too. He also had an E-trade account and traded stocks, although his instincts weren't very good. My sister and I were right in our forecasts more than he was.

Anyway, I'd rather leave small day traders (trading their own money) alone, but I imagine if this tax goes through it will probably be paid by them and the institutional investors will be exempt.
It would be fairly simple to exempt small investors from this tax. Of all the problems designing it creates, that one's at least doable.
 
Mar 2012
57,883
39,438
New Hampshire
#10
It would be fairly simple to exempt small investors from this tax. Of all the problems designing it creates, that one's at least doable.
It would be but its doubtful. Its more likely to keep the tax in since there probably are far fewer small traders. Wall St will whine and get their way.
 
Likes: Blueneck

Similar Discussions