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.
>
>
>