How do we fix the economy???

PeterZ wrote:You keep citing the 10% transaction tax as if that's what is being assess to each participant in each transaction. It is not. Upon the final sale the effective tax paid on the complete transaction by the owner is less than 10% for positions that have show a gain.

For each transaction each participant only bears a 5% cost.

And any trading activity is meaningless without a minimum of 2 transactions. You have to get in, and you have to get back out. So splitting your 10% tax between the buyer and seller on each individual transaction so you can cite a 5% number rather than putting it all on one or the other in any given transaction is just shuffling numbers around.

Either it's all on the buyer and I pay 10% when I buy but nothing when I sell... or it's all on on the seller and I pay nothing when I buy and 10% when I sell... or it's split and I pay 5% but I pay it twice.

And yes the difference in the value between when I buy and sell will mean the total won't end up being exactly 10% in the split case, it could be either higher or lower, but it's going to average out to pretty damn near 10% and you know it or you wouldn't have used 10% in your revenue generation calculation. That 10% tax revenue doesn't appear out of thin air with nobody actually paying the 10%.

A calculation btw that depended on the number and value of transactions remaining steady when you impose the tax which is simply not going to happen.

Something like HALF of all those transactions are currently high frequency algorithm driven trades. Those vanish in an instant if you impose this tax before we even get into the crippling effect it will have on the number of slower 'manual' trades as well. You could argue that eliminating those computer driven HFTs is a good thing conceptually but that doesn't change that they just disappeared as a source of transaction tax revenue and just like that your country is plunged into crippling debt because you are nowhere near making up the revenue loss from eliminating income taxes.

So, let's assume the most tax avoidant participant, The hedge Fund manager, wishes to navigate this system. He opens his positon (buys) in London. The position is likely leveraged and so a small change in price generates a high return.

Ahem. A "small" change in price in his favor generates a large return *if* that change in price reaches the point where he makes back the loss from paying the transaction fee and begins turning a profit. Which means the larger your transaction tax the bigger that "small" gain needs to be before he sees any return at all.

On the other hand if it doesn't cover it, or if that small or not so small change is in the wrong direction, all that leveraging of his position he did is going to bite Mr. Hedge Fund manager's ass. Leveraging is not a magic "I'm going to make more profit and pay less taxes" wand. All it does is magnify both profit AND losses, and the net effect is going to be a wash. Or it would be, except with the transaction tax in place you're basically switching from making any investor have to pick a winner to making any investor have to pick a winner AND beat the spread. You are making it harder to get into profit at all.

Effect? Massive portions of that money is running for the hills and sinking itself in safer investments or savings vehicles. Transactions absolutely crater. Market decimated.

gcomeau wrote:Effect? Massive portions of that money is running for the hills and sinking itself in safer investments or savings vehicles. Transactions absolutely crater. Market decimated.

A massive portion of the trades head for the hills, the large profits stay in the US. Assuming your 50% of all trades are algorithm generated is accurate, then those 50% will be small percentage trades. Some of which will generate gains and some losses. All of those will disappear from the US markets. So what.

Of the remaining non algorithm based trades, there will be losers and winners. The losers stay abroad, the big winners sell in the US to the US. Those big winners could be from stocks and bonds purchased years ago with massive unrealized capital gains. They could be generated from short term spikes or leveraged trades. Regardless, they are either going to be taxed as capital gains or a transaction tax when liquidated. Which tax will extract the smallest amount from the sale?

Right now it doesn't matter how many transaction occur. What matters is how much in gains are secured in a sale. The same applies to the transaction tax. Depending on which tax structure is advantageous, the transaction will either stay abroad or be sold here in the US.

Buyers may well prefer to buy abroad, but will buy domestic as their income is not taxed and they will have more money available to purchase investments. bottom line is that I believe your logic in this regard is completely wrong and nothing you have said suggests that I am wrong.

PeterZ wrote:

gcomeau wrote:Effect? Massive portions of that money is running for the hills and sinking itself in safer investments or savings vehicles. Transactions absolutely crater. Market decimated.

A massive portion of the trades head for the hills, the large profits stay in the US. Assuming your 50% of all trades are algorithm generated is accurate, then those 50% will be small percentage trades. Some of which will generate gains and some losses. All of those will disappear from the US markets. So what.

The transaction tax isn't on gains or losses. Revenue generated from a capital gains tax is dependent on whether and how big a gain there is, but that is totally irrelevant to a transaction tax. The revenue generated from the tax has zero dependence on whether the transaction proceeds to result in a profit or loss for the investor. How much revenue you generate is directly proportional to how many transactions are occurring, not how said transaction performs afterwards.

So you slash half the transactions, you slash half the revenue your calculation was depending on to say this tax would replace the income tax revenue.

Now, based on your own numbers a few pages back, you're a few TRILLION dollars short on revenue. Government bankrupt. That's so what.

Right now it doesn't matter how many transaction occur. What matters is how much in gains are secured in a sale. The same applies to the transaction tax.

No, exactly the opposite with a transactional tax. Gains and losses are zero factors. Only the value of the trade when it is executed regardless of whether the seller has seen a gain or loss or the buyer is going to see a gain or loss.

There is just no way to accurately prioritize some laws and regulations over others (child pornography is a heinous crime, but also very low volume; car safety standards are perhaps onerous, but do have a very measurable effect on road safety, which is definitely in the public's interest).


Which serves the public interests?

A senate investigation into steroid use in major league baseball or investigating how a few who hold key committee positions abusing their constitutional responsibilities by refusing to hold hearings on the vacant supreme court position??

Done trying to pierce the thick block I am dealing with.

Annachie wrote:Well no Tensh. What seems to happen is the people with the biggest share of the pie try for the biggest share of the new pie. (I accidently wrote piggest. It might fit better actually )

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Ah, you focus on the wrong parts there i think.

My point was that we KNOW that the oversimplifications he stated isn´t true, simply because it has already been proven so historically, several times over.

The claim that only economic means can create wealth is so far from reality that it is just sad how such a lie is continuously perpetuated. My own country created a huge part of its wealth through political means, while the attempt by Russia in the 1990s to generated wealth through unfettered capitalism and the utter disaster that resulted in, blatantly shows that economic freedom is absolutely no guarantee of generating wealth.


And yes, the people with the biggest share often DO try to get more of it. Which is exactly why ADDING politics is a better idea than ONLY economics, because in most democracies at least, the people sitting on the big shares are NOT the people involved in politics.




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C. O. Thompson wrote:Some of your pie has to go to support the infrastructure... finding the fair and reasonable way to be sure that no one cheats on this is also part of the infrastructure.

I have said earlier, government is not "a for profit business" it is intended to support the 'climate' in which "for profit business" can operate.

Indeed! A HUGE part of the difference between pre-modern economies and today is that GOVERNMENTS take care of infrastructure and making sure there is stability that economic actors can rely on.

That is in fact one of the primary reasons why the Roman empire became as powerful as it did, and also why it fell apart when it was no longer capable of fulfilling the same functions.



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PeterZ wrote:Taxes are necessary. Setting rates to punish is not. Moreover setting rates to punish is stupid. 90% marginal income tax rates is punitive.

And as always when someone throws around that concept, i have ask, do you actually understand what marginal tax is?

Because it is an extremely common trick from rightwing lowcost propagandists to use it misleadingly, because far too many people have never actually been correctly told what it is.

If you have a marginal tax of 90%, the taxes you pay in total can be anywhere from greater than 0 to 90%.

Because marginal tax refers to how much tax you pay on your last dollar, NOT how much tax you pay overall.

Let's discuss income taxes. Are they the best means to tax a sovereign people?

Very much so yes. The best alternate is taxing land, and that becomes extremely skewed in reality. 2nd best alternate is taxing economic activity and while better, it leads to a rollercoaster style of income for the government, which is a frickin disaster.

One argument against an unrestricted income tax is that the tax is a tacit assertion that the government owns all of the citizens' income and allow them to keep some of that income.

That´s just complete bullshit. That´s not an argument, it´s blatant stupidity.

To some of us the theoretical assertion that government owns all income is disturbing.

I suggest you start thinking for yourself then instead of listening too much to sweettalking idiots and conmen.

I would prefer some sort to sales tax as opposed to the income tax. Taxing income is not responsive to the ebb and flow of the economy. A sales tax incents government to encourage economic activity. The more activity, the more tax revenue. Effectively people voluntarily pay their taxes.

By your own argument from earlier, that just says the government now owns EVERYTHING...

And no, taxing income is quite responsive to changes in the economy, it´s just not as DRASTICALLY responsive to it, which is why it is a very good way of taxation, strongly reducing the probability that government taxes will not suddenly fall severely in a way that cannot be compensated for.

Bottom line is that this method is more consistent with voluntary exchange and so morally superior to a system based on compulsion.

Say WHAT? Sorry, but all taxation systems are based on "compulsion" and your suggested one has zero greater voluntary parts of it.

Seriously, your ranting about "morally inferior" is just making you look something i wont even write because it´s way too offensive.



And sheesh people, just how many posts have you done, i wasn´t even gone 10 days and there´s 5 new pages of posts?

It sounds like we are assuming the paper economy is the real economy. The real economy has been defined as a combination of specialization to improve production and distribution, with trading needed because no specialist can produce all the things they need. This is the definition I accept for economic means. The paper economy is useful to the extent it promotes this. When it becomes oversize or is misused, it starts hindering the real economy. Defining politics as whatever gets wealth by taking instead of making, or faking instead of trading, shows how the real economy is hindered. Taking or faking include "crony" capitalism, but not those who work out ways to reduce costs or improve quality.


IIRC, the earliest known stock certificate is from the 1300s. In any case, the buying and selling of shares began when the costs of setting up, whether for trading, production, or distribution began to be so high that it became difficult to raise the needed capital. Don't think that stocks, bonds, and the rest of the paper economy are for the purpose of letting us make money. They are for providing the amounts needed for the public companies - letting us make money (if we are careful) is the company's cost of raising the capital, so that they don't need to depend on a few extremely rich people.

Unfortunately, whenever wealth is involved, the scammers, conmen, and manipulators move in, which is one reason why it is important to always research well before using a given strategy, or investing in a given company. Making your mistakes with paper, pencil, and spreadsheet is much less expensive than making them in life

There definitely should be a transaction tax, between 0.1% and 1% of the price, paid by the seller. Not just to raise money for the government, but to reduce the frantic trading that seeks to profit from tiny fluctuations in stock prices.

Buying and selling the same stocks over and over and over again does not create value!

"Stock traders", "fund managers", and all the other financial "wizards" are nothing but parasites. They do not create value; they just add costs that must be paid by others. Every one of them has a "system" and they have turned the stock market into a casino. Their activities are the financial equivalent of jacking off.
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It is not within the power of any government to increase the value of unskilled labor, only to raise its cost.

Not just the seller, bit both parties should pay for the transaction as both parties engage in the transaction. Setting the rate is open to discussion.

I contend that such a tax be priced to replace capital gains and income tax on dividends rather than simply add an additional source of revenue.

Imaginos1892 wrote:There definitely should be a transaction tax, between 0.1% and 1% of the price, paid by the seller. Not just to raise money for the government, but to reduce the frantic trading that seeks to profit from tiny fluctuations in stock prices.

Buying and selling the same stocks over and over and over again does not create value!

"Stock traders", "fund managers", and all the other financial "wizards" are nothing but parasites. They do not create value; they just add costs that must be paid by others. Every one of them has a "system" and they have turned the stock market into a casino. Their activities are the financial equivalent of jacking off.
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It is not within the power of any government to increase the value of unskilled labor, only to raise its cost.

PeterZ wrote:Not just the seller, bit both parties should pay for the transaction as both parties engage in the transaction. Setting the rate is open to discussion.

I contend that such a tax be priced to replace capital gains and income tax on dividends rather than simply add an additional source of revenue.

And it has already been pointed out to you that the only way to make up the revenue from capital gains and income taxes with such a tax would be to set it so high as to almost completely halt all trading (which would mean you *didn't* replace the revenue) and you keep pretending that for some reason trading would continue at near the same levels with just a different pattern of behavior... which is absurd.

Nobody in their right mind has ever proposed a transaction tax of even a significant fraction of what you are just casually saying would be appropriate here. And for good reasons. It would destroy. the. market.