Traders Tax: H.R. 4191 (H.R. 1068) in Congress Now

I don't post in here often, but look through the forum here a lot. I just got an email an about this new traders tax bill in Congress now. From what I understand this could ruin day trading for everyone.

The email had a link to go to and sign a petition to send to U.S. Congress.

I just signed the petition and figured all the traders in here would want to as well as it is very important they don't pass this bill.

www VoteNo1068 com (this link no longer works so disabled)

edit: Link to H.R. 4191 http://www.govtrack.us/congress/billtext.xpd?bill=h111-4191

IT'S BAACCKKKK !!!!!

Nov. 19 (Bloomberg) -- House Democratic Leader Steny Hoyer said a tax on large financial transactions is among the ideas being considered to help pay for jobs-creation legislation.

The tax rate would range from 0.02 percent for swaps, futures and credit-default swaps to 0.25 percent for stocks, according to the lawmakers’ letter. Options would be taxed at the rate that applies to the type of the underlying asset.

The tax would eliminate the incentive for “excessive speculation because much of the excessive risk on Wall Street is high-volume, short-term speculative trading,”

They have us squarely in the crosshairs this time...

Whew, nothing about Forex.

I am curious as to what some of the traders here are going to do?? I have already switched from stocks and options to FX, and am grateful I did from fear of this tax. I am still scalping but if/when this goes through I am sure I can trade my 1min charts for 60min, and my 30min charts for daily, and keep making the same thing. Basically I am not waiting for change I am trying to adapt before this thing happens. Although I am sure volume and movement will change. But I haven't bled, sweat, cried and lost sleep (and I love my sleep) for nothing. Market's change that goes with the territory.

This is the only reference I have seen that doesn't mention FX. I think that if you think this will bypass FX you are going to be in for a big shock. They know everyone will just flood to FX to get around the tax, and that FX is a big cash cow with tons of trading. My opinion is that if/when they pass this FX is guaranteed to be included. You'll see.

With this kind of reasoning, I think we are in a lot of trouble.

http://www.zerohedge.com/article/transaction-tax-becoming-distinct-possibility-does-it-bring-benefits-table

Imagine thinking a 75% decrease in government bond trading volumes is not something to worry about. Just imagine being willing to go into the markets and change things that much in one shot, across all markets, and expecting no unintended consequences.

Imagine them thinking that 'Joe Average' won't feel a thing when he buys some stock. If that 0.5% is per side, buying 1,000 shares of something like AAPL for the retirement account costs a $1,000! And another $1,000 when you sell, win or lose. Imagine trying to rebalance your portfolio. Imagine mutual funds trying to buy and sell, and passing those costs on.

Now, here's something to consider. There is mention of no tax for orders under $100,000. That's a start. But, here's what I think will happen. They will exempt all the big banks and such (maybe taxing only transactions under $100,000?), and not the small traders, the exact opposite of what they are implying here (and if they don't exempt the big banks and have the $100K cutoff, they will all start doing $99K transactions...). So, we go out of business, and for the ones who caused all this, it's business as usual. Very good solution. People are just not seeing all the implications of what they are likely going to do. We need to get more proactive, or we will all be out of business.

I agree Jim, traders need to do something more. Writing letters and emails don't work I suggest getting the blue pages and calling you congressman and tying up his time, thats the only thing that would get there attention. Letters just don't work!

Story gaining traction today, Speaker Pelosi is talking about it now...

http://www.reuters.com/article/businessNews/idUSTRE5AI3ZV20091119

Joe:

The Tobin tax, named after the late economist James Tobin, would levy a fee on every transaction in the foreign exchange market.

Jim:

I think you are assuming the $100 K applies to each transaction. But I think the wording can be interpreted to mean the first $100K of transactions each calendar year...

"The tax would be applied to stock transactions (at 0.25 percent), futures, swaps, credit default swaps and options. In an effort to make sure it does not affect pension funds or average investors, it would be refunded for the first $100,000 of transactions annually, as well as for tax-favored retirement accounts, education savings accounts and health savings accounts."


I also note the word "refunded" in there, which means to me, the tax would be taken out up front for ALL transactions at the time they occur, then some of the tax might be "refunded" back to you on your Form-1040 at the end of the year. Of course that initial refund can be adjusted (reduced or dropped entirely) in future years once the tax is in place.

George Monbiot argues in favour of a Tobin Tax, in his 2006 book Heat: How to Stop the Planet Burning.[14]
In November 2009, the British Prime Minister Gordon Brown raised the idea of a tax on financial transactions, but did not go into specific details. The US Treasury Secretary Timothy Geithner quicky told the press that any such tax would have to be world-wide if it was to be effective, and he foresaw no way that that would ever happen.


As I have stated before my brokers have said the same thing. There is no way they can impose tobin tax on FX markets It would have to be a global effort, as they cannot tas foreign traders for using american dollars.

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