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Taxing financial transactions

Full story on CNN

The bill, which is still in the draft stages, would tax each stock transaction at 0.25% and futures, swaps and credit-default swaps at 0.02%. The bill's sponsors estimate that it can raise about $150 billion per year, half of which could be set aside in a "job creation reserve" for Congress to allocate in the future.

Seems to me this is backwards. Credit-default swaps in particular are a big part of what caused the financial mess we're in (at least according to some people.) Why tax those at a lower rate than regular stock transactions, which haven't been blamed for anything? "Average americans" can participate in stock transactions far more easily than they can participate in any of the more complex financial instruments, so yeah there's a larger tax base to draw from, but this particular tax structure incentivizes riskier behavior. I'm not (necessarily) opposed to a tax on financial transactions, but let's make it at least a fixed rate across the board, if not a higher rate for transactions which pose a greater risk to the financial system?


( 8 comments — Leave a comment )
Dec. 2nd, 2009 03:16 pm (UTC)
Still no word on REGULATING credit default swaps? Last count I read, people were speculating there were about 10 for every 1 mortgage, though that could have been inflating over time.
Dec. 2nd, 2009 05:40 pm (UTC)
Does this mean tech companies will stop using stock as incentives for employees?
Dec. 2nd, 2009 06:29 pm (UTC)
No, but using stock as an incentive isn't a bad thing.
Dec. 2nd, 2009 06:33 pm (UTC)
I heard they get taxed LESS for them than they do cash equivalent.

Not sure though. I just use some tax preparing thing to do my taxes.
Dec. 2nd, 2009 06:38 pm (UTC)
That's not exactly true. When stock is used as an employment incentive, there are a number of different ways the stock can be granted. In the case of an outright grant of stock, the stock is taxed as regular income, at the value of the stock when the grant is issued. In the case of a stock option (that is, the recipient has the option to buy the stock at a fixed price at or below current market value, which can be exercised immediately or at a later time) the difference between market value and the option price is generally taxed as ordinary income. The exact time and rate of tax depends on the exact type of option, as there are a number of different types.

BASICALLY, though, the value received by the employee (vs. if they simply purchased the stock at market value) is taxed as ordinary income, then the gains are taxed the same way all other stock gains are taxed.
Dec. 2nd, 2009 06:38 pm (UTC)
What are you doing between January 2nd and April 15th?
Dec. 2nd, 2009 06:40 pm (UTC)
Flying out to help you do your taxes, apparently. ;-)
Dec. 2nd, 2009 06:40 pm (UTC)
Yay \o/
( 8 comments — Leave a comment )


Galen Wolffit

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