Loading ...Every trader I know is talking about a new tax proposed on Wall Street transactions. This new tax is said to be in-between 0.1% to 0.25% on every trade and will net 125 to 250 Billion per year in new revenue for government. As an individual investor, I welcome this tax IF and only IF three conditions are met. First, the tax should be only charged to the buyer side of the transaction, this would avoid double taxation on a single transaction. Second, 50% of the new tax should be charged to the market maker to assure that the spread is affordable. Lastly, there must be controls in place to prevent this tax from creeping up like the income tax. The income tax started at 1% to raise capital to fund a war. It eventually reached 50% 100 years later before Reagan changed tax laws.
The nice benefit of the tax is that it will add to the cost of high frequency trading conducted by the large financial institutes to manipulate individual stocks. Therefore, retain investors will have a little less disadvantage when trading stocks. As of now, the big financial institutes have the capital and equipment to move the market whatever way it wants to. Common sense, evaluations, and risk versus reward equations all point to an extremely overvalued stock market.
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