Cut the taxes of rich conservatives, and raise them on all liberals. Problem solved!

[Kasz216]

Aielyn said:

Kasz216 said:
Ever think it took time for the market to rebound?  That tends to be how stockmarket works.

As for the bolded... only because you don't really know how High Frequency trading works... note that despite said tax, the US has the biggest instances of High Fequency Trading...

Why is that? The main problem with high frequency "trades" is that many don't actually end in a transaction for which to tax.  High Frequency Traders will  put out orders and immediatly cancel them allows them to unfairly feel out the market and maximize profit.

It's impossible to undercut someone using a HFT computer.

They'll make there offer, you'll undercut it, then as soon as your offer is made, they will automatically cancel their last order, and undercut you.

If you've never invested.  It's like being in an ebay auction and only one person has the "max bet" limit.

The reason you make them hold it, is so they can't unfairly outbid regular investors.  THAT is the big issue and what would be increasing or decreasing volatility.

The "Market Making" aspect of HFT is perfectly fine and just replaced something that already existed.

 

I swear too... I never get why people blame Glass-Stegal.  It's like nobody actually looks at what the repeal of Glass Stegal did... which was... not much, and led to the market still being more regulated then Europeon Banks.  Glass Stegal allowed investment banks and commercial banks to merge.

Ignoring the fact that banks were already allowed to offer both consumer banking and investment banking.

Well it seems to me that, if that's what they're doing, they should just remove the "cancel" option.

Or apply the transaction tax to the initial order (or rather, orders that are cancelled, rather than outbid), rather than the final transaction. People would be far more hesitant to put in orders and then cancel them if every time they did it, it cost them money. There's so many ways one could address it.

And I'd say that the repeal of Glass-Steagall was really just a formalisation of the fact that they were already not-really-enforcing it, as you say. That's often how it works - regulations are ignored first, before being repealed. And "more regulated" doesn't mean "better regulated" (nor does "less regulated"). Glass-Steagall was intended to prevent banks from doing exactly the sort of thing that they did in the leadup to the GFC. Had it been enforced, rather than repealed, the situation wouldn't have arisen.

 

Meanwhile, here's a question for someone who has actually had experience with capital gains tax. Does it get applied to dividends, or do dividends get treated as just regular income?

 

Except... they were enforcing Glass Steagall... most people just don't know what Glass Steagal was.

As for removing the cancel option... that would just be a disaster.  The facebook IPO is a good example of what would happen if you did that.

As for a transaction tax right away... then your just punishing regular traders very hard.  Something like 40-60% of American households own stock at any time... and most "ametuer" investors tend to play the short term game.   Your average stock is only held 7 months.

Which sounds like a long time, until you take into account the numerous pension funds, fixed income funds and the like that tend to buy stocks of juggernauts and just lets them sit for a decade or so.

The tax, and getting rid of the cancel button would harm those with less money disproportionatly and also cause them to hesitate more and miss out more.  While the 1 minute waiting time?  Won't effect them at all... except by leveing the playing field. 

Well okay, 1 minute might.... but the SEC is actually looking for a smaller time penalty then that. 

As for Dividends.  Dividends have their own tax... which is either taxed at Income tax or Capital gains depending on the dividend.  It will be going back to purely income tax rate in 2013.