http://www.nytimes.com/2009/01/13/opinion/13herbert.html?_r=3 As a short term trader who relies on making frequent trades, profiting on smaller increments than the normal "investor", this makes me sick. Not only that, if implemented, it could lead to more unemployment, and a less competitve marketplace, leading to better foreign opportunities. Also, the next logical concept that comes into lay is how the US would regular offshore trading and accounts, etc
Well that's just it isn't it. A tax like this would hurt NY at the gain of London, Frankfurt, Tokyo, Zurich, Dubai, etc. In an electronic market, domestic trade taxes do not work.
In and of itself it isn't the worst of taxes. It's that this is going to on top of all sorts of other things. It's nickel and diming the private sector to death. This is the only sector of the economy actually capable of creating new and more wealth. More so it's based on the premise that the Federal government "sorely needs" more revenue. To me that's like arguing that the a teenager who spends lots of their money on concerts, beer, spring break in Cancun, etc is sorely in need of more money. There's plenty of areas where money could be better spent or not even spent at all.
The finance industry is on the ropes as it is, this would be the final nail in the coffin. One advantage the United States has used to its advantage is its deep, liquid financial markets that are the envy of the world. This allows for the efficient allocation of capital. A tax would destroy this liquidity very quickly. They need to clean up the derivatives mess, that is for sure. But the law of unintended consequences would rear its ugly head faster than you can say Dubai. What will happen is that they will tax it, and everybody who is in this business walks into the open arms of Dubai, Singapore, and Hong Kong. Folks who would love to have a ton of investors, traders, mutual fund managers and the tens of thousands of support personnel. You will have fund managers living in Costa Rica, Australia or a place with little or not income taxes and trading on Asian exchanges and the United States will never collect a dime of tax on anything because these folks will simply hand in their passports. I know I would. All exchanges will simply set up shop overseas and the United States will NEVER be a financial hub ever again. Once the toothpaste is out of the tube you cannot get it back in.
Agreed. The markets rely on all types of participants short term and longer term to create a pool of liquidity. While one is selling an hour long trade gain, they are perhaps selling to another who is buying for the long haul... Thats the first reaction I had. But from asking around and reading responses from people seemingly familiar with tax codes, as long you are a US citizen, you are taxed under that law whether you are trading from Dubai, NYC, or Asia. It doesnt matter. Your only way out is to denounce your citizenship as a US citizen. I hope this isnt true, but it seemed to be agreed upon.
It's residency, not citizenship. I'm tax exempt up to a insane point and I am keeping my US passport. But my residency is in the UAE.
This is true. The United States is the only country in the world that has worldwide taxation, which means you are taxed on citizenship and not on where you live. This is a shocking relic from god knows when that applies to corporations as well. It is a wonder ANY companies that compete internationally would be domiciled in the US. That is why I said people will be lining up to hand in their passports. Lets see, you can manage money from Bermuda/Costa Rica/Panama/dozens of Caribbean islands.Singapore with no income taxes and give up American citizenship which as time goes on will be an albatross (just wait till the boomers retire, you ain't seen nothin' yet). Or you can stay in the United States and be unemployed and miserable because the social engineers wanted even more money than they already have. Not too tough of a choice. In any event, it will never happen because Obama's hometown is Chicago and tens of thousands of jobs are directly or indirectly related to the futures exchanges, mutual funds, and the host of support these entities require (accountants, lawyers, etc.). And many, many of these jobs are well paid. And like I said, if you made this mistake like this those jobs will not come back. Even now, with modern communications, their are many pastures that look as green if not greener than the United States.
Easy as pie, although access to alcohol is limited and access to porn is non existent. As for markets, this place is ready to pounce on anything and will do anything to get your business. The culture couldn't be more accommodating to those that want to build and grow here. I am typing this right now from the Dubai international financial center and this place buzzes. NYC is still the big dog and will be so for the foreseeable future but they are not the only or even best game in town right now.