Sunday, December 21, 2014 06:13pm
North Adams, MA now: 28 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Robin Hood Would Be Proud
By Bill Schmick On: 08:22PM / Thursday December 29, 2011
Important
0
Interesting
1
Funny
0
Awesome
1
Infuriating
1
Ridiculous
0
Taxes are not my favorite thing. Like everyone else, I would like to see less, rather than more, taxes in my life. However, there is one tax under consideration in Congress that I fully support

Some call it the "Robin Hood Tax" (part of HR 3313) because it supposedly taxes the rich and distributes the proceeds to the rest of us peons. It is a bit more complicated than that, but you get the idea. Some say the proposal surfaced as a result of the Occupy Wall Street movement. Others credit the late Noble prize-winning economist James Tobin for the idea. The basic thrust is to impose a financial speculation tax of .03 percent or $3 in taxes for each $10,000 in financial transactions.

Although it doesn't sound like much of a tax, its proponents claim it could generate as much as $48 billion or more per year if all G-20 countries signed on to implement the tax.

In Europe, where every nation is scrambling to raise money, the idea is supported by the European Commission in Brussels that would like to see as much as $10 per $10,000 tax in place throughout Europe by 2014. The Italians, under their new Prime Minister Mario Monti, is planning to impose the tax as part of his country's fiscal reform plan. Both the French and German leaders are on record as backing the idea and even Pope Benedict XVI came out in support of it.

In the United States, the idea has found surprising support among some strange bedfellows. Bill Gates, George Soros, Ralph Nader, Al Gore, the nurses union and the AFL-CIO among others. As such, a bill to impose a tax on certain trading transactions in financial markets (part of H.R. 3313) is working its way through Congress. All the sponsors of the bill are democrats.

Republicans oppose it, which should come as no surprise since the vast majority of Republicans won't even read a proposal to raise taxes of any sort. Surprisingly, the White House and Britain's Prime Minister David Cameron are less than enthusiastic about it. Both feel it might jeopardize their country's leadership positions within financial markets where such a tax may drive traders elsewhere to do their business. The White House also believes it would hurt pension funds and the banks.

In my opinion those are lame arguments and don't square with the facts. For instance, both Hong Kong and Singapore, two fast-growing financial markets, already charge a $20 per $10,000 transaction tax. Great Britain, the leading financial center in Europe, has had a stamp tax in force for 25 years called the Stamp Duty Reserve Tax on most paperless trades of companies located or registered in the UK. It has not impacted the financial status of those markets one whit.

The Securities Industry is against it (surprise, surprise) warning that such a tax would impede efficiency, depth and liquidity in the markets as well as raise costs to issuers, pensions and investors.

What the tax will do, in my opinion, is reduce the speculation in global markets while generating much-needed revenues. Speculation, in the form of High Frequency Trading (HFT) is the bane of our existence. These traders buy and sell blocks of stocks, bonds and exchange traded funds second by second, minute by minute in large volumes throughout the day generating thin but profitable trades that add up. They could care less about a company's earnings or its future prospects. When a stock drops, hundreds, if not thousands, of HFTs and day traders jump on the trade, like vultures over a wounded animal, they drive their victim to its knees before going on to their next prey, all in the name of profit.

A $3, $5 or even $10 tax on these transactions will crater that market and do much to reduce global volatility. Who knows, actual investing may come back into vogue and with it the retail investor. Sure, the tax may hurt the little guy but the individual investor usually doesn't trade 10 or 15 times a day at $10,000 a crack.

Detractors argue that it is not HFT but the circumstances of the market, such as the European crisis, that is responsible for the volatility. I agree that the problems we face worldwide do create volatility and always have, but the markets have never reacted with the level of violent swings and almost daily market volatility that we experience today.

So I say string your bows, Oh, ye Merry Men, let arrows fly and support this transaction tax.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.




6 Comments
     
News Headlines
Pittsfield Weighs Construction Manager Model For New Taconic
Backstop Repairs Drain Last of Pittsfield's Bossidy Funds
Berkshire Battalion Loses Second Straight
McCann Students Lauded for Leadership & Skill Building
BU Looking For More Use of Tanglewood Campus
Battalion Falls at Danville
Berkshire County Arc Receives Workplace Wellness Grant
Cultural Pittsfield This Week:Dec. 19-Jan. 4
Groundbreaking Ceremony Held at New Williamstown Senior Housing
Shakespeare In the Park Will Resume At Pittsfield Common

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (152)
Independent Investor (208)
Archives:
December 2014 (4)
December 2013 (2)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (8)
Tags:
Taxes Fiscal Cliff Federal Reserve Congress Greece Bailout Europe Debt Banks Energy Housing Japan Commodities Crisis Markets Stocks Retirement Election Pullback Europe Stock Market Fed Jobs Economy Stimulus Recession Metals Oil Interest Rates Deficit Rally Euro Debt Ceiling Currency Selloff
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: Election Investors Ignored
@theMarket: It's All About Oil
The Independent Investor: Is Russian Bear Back In His Cave?
The Independent Investor: The Truth Behind Black Friday
The Independent Investor: Is There a Doctor in the House?
The Independent Investor: The Pipeline Made Simple
@theMarket: Markets Are in Half Time
The Independent Investor: U.S. and China Square Off
The Independent Investor: Workers Get to Save More in 2015
@theMarket: All Clear


View All
Girls BB: S Hadley vs Hoosac
Friday night girls BB game final - Hoosac 65 South Hadley...
Girls BB: Mount Greylock vs...
Greylock beats Wahconah 52-46
Hotel on North Construction
Media and local officials got a tour of the under...
Hockey: Wahconah vs Taconic
Andrew Beaudoin scored two goals and added an assist to...
Swimming: St. Joe s vs...
Emma Whitney and Jesse Tobin each won two events to lead...
Boys BB: St. Joe vs Drury
The annual Gene Wein Boys Basketball Holiday Tournament got...
Boys BB: Monument Mountain vs...
The annual Gene Wein Boys Basketball Holiday Tournament got...
Girls BB: St. Joe's vs McCann
McCann Tech girl's win over St. Joe's, Monday night at...
Cheshire Church Christmas...
Cheshire residents walked or traveled by hayride to...
Sen. Downing's Holiday Open...
State Sen. Benjamin B. Downing held his annual holiday open...
Crane Winter Wonderland 2014
Santa's Winter Wonderland at the Crane Mansion.
Boys BB: Chicopee Comp vs...
The Drury boys basketball team recorded its first "W" in...
McCann LPN Graduates 2014
McCann Technical School's Licensed Practical Nursing...
MCLA Honors Adams Scholars
MCLA recognized the achievement of high school seniors who...
Wahconah Falls in State Title...
Wahconah never did get those points in a 43-0 loss in the...
Pittsfield March for Justice
More than 200 Pittsfield and county residents marched on...
Girls BB: S Hadley vs Hoosac
Friday night girls BB game final - Hoosac 65 South Hadley...
Girls BB: Mount Greylock vs...
Greylock beats Wahconah 52-46
Hotel on North Construction
Media and local officials got a tour of the under...
Hockey: Wahconah vs Taconic
Andrew Beaudoin scored two goals and added an assist to...
Swimming: St. Joe s vs...
Emma Whitney and Jesse Tobin each won two events to lead...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved