Thursday, November 15, 2012

Transaction Tax on Stocks and Bonds

Reply to comment on previously cited post to

Proof Reader:

The Transaction Tax in the Full Employment bill would be 0.25 percent  on each stock or bond trade, and 0.1 percent on each derivative trade.

If you are an investor who holds a stock for a year on average before selling it, that would be two trades on a $100 stock, costing you an extra 50 cents per hundred per year.  Speculators who hold stocks and bonds for days or minutes before selling could run up quite a bill.

This tax would hugely reduce the volatility of the markets and would largely eliminate the advantage enjoyed by programmed computer traders, making the market fairer and less dangerous for smaller investors.  I would expect that your average garden variety millionaire would actually come out ahead!

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