Would this help the economy, or kill it? (USA)

Sales tax on stock transactions.   

GO!

Gains in the stock market are already taxed.

Racebrick said:

Gains in the stock market are already taxed.

What he said.

Racebrick said:

Gains in the stock market are already taxed.

Gains are, but not transactions themselves.

Honestly, it would just be passed on to the public like everything else is. Especially since it would be the same for all brokerages, there would be no opportunity for one to undercut the others.

Has any tax ever done anything other than raise prices for consumers?

The question that you're asking is, should the sale of a business be taxed. 

Interesting proposal. Do other countries do this? I'm inclined to say that it should not happen, although stock grants/RSUs are taxed as income when they're vested.

RevRico said:

Has any tax ever done anything other than raise prices for consumers?

I dunno... I kinda like driving on paved roads.

In reply to mtn :

I don't even have those. 

It would seem like it can only hurt in the long run.  The people that will be most visibly paying this tax is anyone trying to be responsible and save for retirement.  A retirement that will be all the more unlikely for young people if they are now paying a % of what they intend to save at the front end...

I am not going to claim this is unworkable, but why on earth would we be looking for yet another new tax?  The governement already double dips on stock income...  The corporation pays income taxes on their profits.  Stockholders pay tax on the income again if it is paid out in dividends or is part of a capital gain when shares are sold.  I'm just not seeing the utility in adding a transaction tax on top of the income taxes.

RevRico said:

Has any tax ever done anything other than raise prices for consumers?

I regret that I have but one up vote to give.

I'm sure the U.S. government is just a liiiiiiiiittle bit more money away from not being a collection of incompetent and/or intentionally malevolent bureaucrats. 

Taxes always hurt the economy.

A free market economy functions efficiently by using the price system to communicate information about what kinds of goods are needed and the relative priorities of them.  Any tax on transactions disturbs that communication by creating disincentives to engage in the taxed transactions, which screws up the efficiency.

codrus (Forum Supporter) said:

Taxes always hurt the economy.

A free market economy functions efficiently by using the price system to communicate information about what kinds of goods are needed and the relative priorities of them.  Any tax on transactions disturbs that communication by creating disincentives to engage in the taxed transactions, which screws up the efficiency.

 

Yeah. All that interstate commerce on privately held toll roads.  Working. Out great. 
 

or the privately funded army corps of engineers that dredge the Mississippi so that barges can go down. 

RX Reven' said:

RevRico said:

Has any tax ever done anything other than raise prices for consumers?

I regret that I have but one up vote to give.

I don't know... perhaps things like the $800B for the military?  Maybe the $900B spent on Medicare?  Or that $80M bridge that you have crossed 550 times and it didn't fall and kill hundreds of people?

I'm not saying that the government spends tax dollars wisely, but taxes are allowed by the constitution.  Not much we can do about it other than voting for one of a few talking heads.

What I AM thinking is that taxing trades in addition to taxing capital gains would be a way to keep the richest folks paying their fair share of the tab.  Problem is, it's some of those richest folks who are making the laws.

RevRico said:

Has any tax ever done anything other than raise prices for consumers?

Well many wars have been fought over taxes, for one. 

If you're a "supply/demand, free markets and individual consumers exercise rational choice" kinda person then it should follow that taxes (through increasing the price to consumers) also incentivize or de incentivize certain products and services compared to their competition. 

If you're more of a robinhood kinda person, then taxes are a (perhaps inefficient) way of ensuring that everyone puts at least some skin in the collective good game.

And if you're a "we should get back to the good ol days" kinda person, then remember that stock transactions used to have broker fees associated with them, and in the last 30 years with the internet those broker fees have basically vanished. A tax could move us back toward a similar cost structure.

Reducing speculation on fluctuations and rumors and increasing the connection to intrinsic stock value is an idea i like, though I'm not certain about this mechanism, to put it mildly.

 And that's closer to the patio than I am comfortable standing, no matter how important the topic.

In reply to Curtis73 (Forum Supporter) :

We can't make sure the government spends taxes wisely but we CAN make sure the government taxes everyone fairly. 

In reply to Robbie (Forum Supporter) :

I'm in the "turning the stock market into the economy*, replacing the gold standard with fiat currency we borrow at interest so there's no possible way to ever pay it back, and killing everyone who doesn't agree with us or doesn't hand over their resources fast enough is bad" camp. 

I'm also in the "if the government can't handle roads, why the berkeley should they be involved in anything else" camp.

And also "if taxes actually paid for any of this E36 M3 we're told they pay for, why are we $30 Trillion with a T in debt to a private company we aren't allowed to audit" camp.

Mainly I'm in the "Thomas Jefferson was right, we need a revolution every 200 years to stop power from being consolidated, and we're 50 years past due" camp though. It kinda surrounds all the other camps as a perimeter fence.

* this should be read as "putting shareholders and corporations over flesh and blood citizens was a horrible berkeleying idea that never should have happened"

mtn said:

RevRico said:

Has any tax ever done anything other than raise prices for consumers?

I dunno... I kinda like driving on paved roads.

I wouldn't know, I live in Pennsylvania, where all the roads are E36 M3 because all the road tax money goes to the State police slush fund instead of fixing the roads.

Noddaz said:

Sales tax on stock transactions.   

GO!

Frenchy, is that you?

Make the long term tax rate on investments more progressive on the very high end unless they are held for a very long time. Think 5-10 years. 10-15 million a year in pull out should be closer to 30% IMP. 

Increase the flash trading time to say 1 hour on buy/sell and vastly increase the taxes on those gains. Like 50% or higher to stop those idiots from berkeleying with the market. 

Remove the ability to short stocks entirely. 

Set corporate stock buybacks at only 2.5% total outstanding a year and they must hold them for 15-20 years with no ability to release except to make payroll or something else horrible. 

Jesse Ransom said:

Reducing speculation on fluctuations and rumors and increasing the connection to intrinsic stock value is an idea i like, though I'm not certain about this mechanism, to put it mildly.

 And that's closer to the patio than I am comfortable standing, no matter how important the topic.

Concur on both accounts. Well put.

Jesse Ransom said:

Reducing speculation on fluctuations and rumors and increasing the connection to intrinsic stock value is an idea i like, though I'm not certain about this mechanism, to put it mildly.

 And that's closer to the patio than I am comfortable standing, no matter how important the topic.

This is why short term gains are taxed differently from long-term gains.