Pinnacle Activity Ticker
US Government Considers New Tax Initiatives to Steal YOUR Money
Pinnacle Digest writes: New tax initiatives focused on transactions involving the stock market have been put forward by law makers in the United States and Europe. The taxes would focus on the buying and selling of stocks, bonds and derivatives which, needless to say, is a multi-trillion dollar sector.
The most recent proposal was introduced by Congressman Keith Ellison. His bill would add a tax of 0.5 percent onto the sale of stocks, 0.1 percent on bonds and 0.005 percent on derivatives or other investments. Holmes puts this in a buyer's frame of mind. As an investor purchasing $10,000 in shares, the financial transactions tax would tack on an additional $50.
So now, on top of broker fees and whatever your bank might charge you, to hold or transfer your funds, the government wants its take of your money. Its take of your money. Not income tax or consumption tax. Tax on your personal wealth when you decide to sell or buy a financial asset. This is another disgusting example of politicians scrounging for every and any means to extract personal savings from its citizens. The US is getting desperate as we enter the late stages of this debt super cycle.
Those opposed to a financial transaction tax have come out and said the extra cost would undermine liquidity, adversely affect market quality and distort the value of a security.
In a paper titled, “Security Transaction Taxes and Market Quality,” Anna Pomeranets of the Bank of Canada and Daniel Weaver of Rutgers analyzed the historical precedence of financial transaction taxes by reviewing the results of 11 research papers that looked at the relationship between a security transaction tax and market quality in terms of volatility or volume.
Read the report published by the Bank of Canada here
Weaver and Pomeranets did some serious research in an effort to determine if a financial tax is effective at reducing volatility and speculative trading? They also looked into how it affects volume across equity markets and how stock prices might be impacted.
They found that across 28 various security transaction tax (STT) in 11 countries, they saw no significant relationship between the tax and volatility. In other words, short-term speculation was not diminished. The team also found “an increase in the STT is accompanied by an increase in spreads” and that “volume moves in the opposite direction of the tax change.” They also found that there was a direct relationship between the tax and price impact.
In conclusion Pomeranets and Weaver stated, “Taken together, our results suggest that the imposition of an STT will harm market quality.”
Holmes draws on a more recent experiment in Hungary, when after implementing a specialized banking tax, its largest lender saw its fourth-quarter profit decline 15 percent. He went on to note that trouble for the bank continued in the first quarter, with its net profit falling 12 percent year-over-year due to the impact of a special banking tax. Excluding the tax, the profit of OTP (largest commercial bank in Hungary) would have risen by 4 percent.
People will only allow themselves or their money to be taxed so much before they simply abandon ship and put themselves or their money somewhere else. This happened in Hungary and is beginning to happen in the United States.
Our team at Pinnacle finds it bewildering that Congress would even consider such a tax on its citizens after their net worth imploded by almost half following the housing bubble. This speaks to the severity of the federal deficit in the United States and the desperateness of its politicians to increase tax revenues during a period of economic weakness.
Read this article...