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

I say we are all doomed. With a stock tax like that the liquidity will be destroyed, and the ES is made up of 500 stocks. If they go, the mini goes, even if our taxes weren't so bad. And a .02% tax on a mini at 1100 is still $22 RT. Many traders I have seen (like PT's posted results, for example) may only make $50 per trade per contract on average over time, which is a quite good result, in my opinion. Add in much wider spreads, much poorer fills, and you reduce the profits and basically add that to the $22, which is beating down on that $50. And for all the mini traders out there that tell me they make way more than $50 per trade per contract over time, well, don't even bring it up without being willing to post statements, because I'd have to see proof (I'm talking 'daytraders' here, not swing traders). Otherwise, it's just a waste of time for this discussion in here. So, this tiny little .02% tax may cut your income in half or worse.

And that's assuming it won't be as bad as I suspect when a buy/sell of 1,000 shares of AAPL costs your mutual fund or retired portfolio rebalancer a grand a pop. The markets are going to be destroyed. And that won't leave the ES 'highly tradable', in my opinion. Unless my info isn't correct, this type of tax was passed in Sweden in the 70's and quickly repealed when it trashed the markets. So, either the entire world passes the same tax, or trading flows out of the U.S. exchanges into whatever country doesn't have it. I also saw where Switzerland has basically said they would never pass a tax like this. So, we will give up more business to an overseas competitor and lose more jobs. Good plan. Like I said when everyone said I was way too pessimistic, I am already getting my apps together for the local convenience store, as we are all headed out of business, and soon.

Here's a mention of the 1970's Swedish experience. I just noticed it said they repealed it 'after just a few years'. I don't think our quote vendors or trading platform companies, or our favorite brokerages will still be around after that long...

http://www.businessinsider.com/heres-why-the-financial-transaction-tax-cannot-possibly-work-2009-11

Originally posted by MonkeyMeat

Looks like the idea is creating some more "noise" at higher levels now:

"WASHINGTON (Reuters) - A proposed tax on financial transactions "has a great deal of merit" and would help Congress raise needed revenue, U.S. House of Representatives Speaker Nancy Pelosi said on Thursday."

http://www.reuters.com/article/politicsNews/idUSTRE5B24J520091203?feedType=RSS&feedName=politicsNews&rpc=22&sp=true

Cool, the House passes a 45% death tax on the same day this hits the headlines. These f@ckers are power hungry, money grubbing thieves. Has anyone, especially the elected Congress folks, read a tad bit on the history of our country and of how/why taxes were to be handled and their purpose.

It went way off the reservation a while back and now it's not only become status quo, but assumed to be the role of the Fed Govt. to decide what they want to confiscate (and how) from "The People."

The lunatics have taken over the asylum!!!

So, these are the people we chose that we feel have the best chance of representing our interests, because they know and understand our interests so well?

http://www.rollcall.com/features/Guide-to-Congress_2009/guide/38181-1.html?gclid=CLW3u974u54CFRQpawod3GVYmw

Wall St tax has "great deal of merit" - Pelosi

Comments suggest tax could end up in House jobs package

WASHINGTON, Dec 3 (Reuters) - A proposed tax on financial transactions "has a great deal of merit" and would help raise much-needed revenue for the U.S. government, House of Representatives Speaker Nancy Pelosi said on Thursday as other backers touted it as a measure to slash Wall Street salaries.

"It is really a source of revenue that has really minimal impact on the transaction but a tremendous impact on helping us meet our needs," Pelosi said at a news conference.

Her comments suggested the proposal may find its way into a House bill aimed at bringing down the double-digit U.S. unemployment rate before the November 2010 congressional elections.

http://www.reuters.com/article/idUSN0311827720091203

http://www.reuters.com/article/idUSN0152459520091202

This has been my concern all along, the "revenue enhancement idea" outlined in HR-1086 would work it's way into one of theses big critical funding bills. Now it sounds like house leadership is considering slipping this tax into the next major stimulus bill targeting jobs creation. The $150 billion of new revenue this tax promises to raise will go a long way to help fund the new economic stimulus package.

Originally posted by ak1

Trader Tax = $100 * 2 = $ 200 per round turn
The margin money for Emini S&P is $500.00 per contract. Lets hope that this is the amount factored in to calculate the 0.25% TT ($1.25X2=$2.50) If this happens we might get away with around $9.00 round trip including brokerage.

The tax will use the notional value of the underlying security. The notional value of a security is independent of the margin used to purchase the financial instrument. This is why there is a different tax rate being proposed for stocks .vs. futures. Futures use much higher leverage, and therefore a smaller amount of money (margin) controls a much larger position in terms of notional value.

Its garbage pick up day in my area. Can somebody please send this tax file so that I can put it in the right bin lock stock and barrel.

Just a side note. Clicked Jimbo's link to a ranked listing of members' of congress wealth. The top 10 contained 8 Democrats and only 2 Republicans. I don't have a party affiliation, but I do have a view on wealth redistribution (which is part of what this "trader tax" is about).

How 'bout passage of the trader tax be tied to redistribution of wealth to make it a "fair" 5 and 5 Dems/Repubs of top 10 richest congressional bozos. Dems control congress currently, so maybe that'd nip it in the bud right there.

Im still not seeing that the Forex market would be effected by this tax. What about just trading the Nikkie futs?

Yes no word on forex. Its a trillion dollar per day market. What about trading Nikki Futures, can elaborate how to go about it????????????????

Welcome to Planet Pelosi ... going "global."

Monday, December 07, 2009
By Matt Cover, Staff Writer

"(CNSNews.com) – House Speaker Nancy Pelosi (D-Calif.) endorsed the idea of a “global” tax on stock trades and other financial transactions ... At her weekly press briefing on Thursday, Pelosi said the financial transactions tax (HR4191) currently before Congress would have to be made “global” to keep U.S. investors from taking their business overseas and out of taxable reach."

"“Well, let's see, the fact is, what we are talking about is a global transaction [tax],” she said, “something that we would do in conjunction with other G nations, whether it is G8, G20, whatever the current G number is. Because it is really a source of revenue that has really minimal impact on the transaction, but a tremendous impact on helping us meet our needs."

“I think there would be a market for it among the American people to say that we are all participating in the economic prosperity of our country, and we are all pitching in to continue that prosperity,” said Pelosi.

http://www.cnsnews.com/news/article/58099

At least there a few other Dems that are circulating a letter of common sense:

“A $150 billion tax on financial transactions will fall on millions of hardworking Americans who are saving for their future through their 401k plans, mutual funds, pensions and other savings vehicles,” wrote Reps. Michael McMahon (D-N.Y.), Carolyn Maloney (D-N.Y.), and Debbie Halvorson (D-Ill.) in the letter, which is still being circulated on Capitol Hill, a copy of which was obtained by CNSNews.com.

“Americans saving for their retirement, to pay for college or ‘a rainy day fund’ to meet future emergencies will be subjected to a tax that will reduce the value of their savings at a time when they are just starting to recover the losses they incurred at the height of the financial crisis,” the letter states.

ANYWAY ...

Have been brushing up on my equities swing trading strategies lately ... just in case.

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