I suspect that investors would hardly notice the tax. Depending on the
frequency at which they move in and out of stocks, it would likely end up
being comparable to a mutual fund management fee.
The ones most at
risk, including myself, are high frequency traders. The tax would seem to be
aimed at hedge funds that constantly take micro profits, quickly moving in and
out of positions.
Unfortunately, it severely impacts day traders and
swing traders too. It is not uncommon for high frequency traders to have
several hundred trades in a year. With smaller accounts that can be hundreds
of thousands in volume, and several million dollars in volume for larger
accounts. At those rates, that amounts to tens of thousands of dollars in
additional taxes.
If politicians only consider the impact as it relates
to investors (the vast majority), then the tax appears well targeted at Wall
Street. It is only retail traders (minority) that are at risk of being put out
of business.
The bigger impact is, I believe, what impact it would have
on capital leaving the US for opportunities elsewhere.
If US markets
are worth the premium for their stability, liquidity and diversity, then
capital will remain and the politicians will pass the tax. If capital is
expected to flee, the tax will not be passed.
If even just a few of the
larger worldwide exchanges agreed on a tax (in order to leave nowhere for
capital to flee), then the countries involved could reap huge revenues. After
the amount of money that has been poured into trying to save the respective
economies, that revenue stream has got to look pretty appealing right
now!
Mike
--- In amibroker@xxxxxxxxxps.com,
Nick de Peyster <nickdepeyster@...> wrote:
>
> The odds
of this passing strike me as extremely low. So far the government has
been extremely supportive of the financial sector ... is there any evidence
of a change in the winds?
>
> I would think this
trader tax might hurt momentum investors rather than traders (especially
counter-trend traders).
>
> Reason being that the
momentum investors tend to count on the counter-trend traders to provide
liquidity. Of the two, the countertrend traders have the shorter holding
period and smaller gains so the tax will hit them most heavily.
>
> So what will happen is that the countetrend traders will become
more selective to offset the tax. Pre tax the countetrend trades will
become more profitable although after tax it won't make a difference.
>
> The momentum investors will take a bath, because there will be
fewer countertrend traders on the other side.
>
>
>