Tax the Hell Out of Wall Street; Give it to Main Street | Hacker News Reader

Tax the Hell Out of Wall Street; Give it to Main Street

blogmaverick.com

19 pointsAnon8436 comments

One of the more stupider suggestions I've seen in this whole mess. Of course, Mark Cuban doesn't care, he's got f*ck you money.

I don't.

And everyone I know is demanding something a little more intellectually rigorous and just than still more trickle down excrement.

It's very simple. If you're "Too Big To Fail", that means:

a) You're too big to be private, so you'll have to be taken over.

b) You'll need to socialize your losses, so we'll need to socialize your profits.

Or we can not socialize either and let companies who make poor decisions fail.

If their failure hurts us more then not allowing them to fail, then we should really be rational.

But bailing everyone out who's too big to fail just encourages them to get big.

So as the above poster said, we should have an almost automatic break up, or be nationalized law when ever anything gets "too big to fail"

I don't think anyone that is now arguing that some firms are too big to fail are also arguing that we would have been better off if those firms were run by the government in the intervening decades in which they did not fail.

I should clarify what I left unspecified.

By nationalize I mean the government would take over, and then slowly but steadily shut down operations.

This would allow smaller competitor to take up the slack.

It would also encourage companies to break up rather then be nationalized, it wouldn't be much of a choice.

You wouldn't need to nationalise them. You'd just need the equivalent of antitrust legislation.

Ah, communism. You are aware of case against it made by 150 years of theoretical and empirical economics, right?

Not the same thing as socialism, would could include some nationalised industries, like most countries had until they sold them off in the 80s, and some still have now. Then we have new socialist policies like nationalising banks and mortguage lenders happening as we speak, so not dead at all.

I would like to point out that we do tax profits.

> One of the more stupider suggestions

Agreed.

I've long argued for something similar, just in the housing market: the short-term capital gains tax on homes should be 95%.

The government got into the home-loan business under the pretense that it needed to encourage home ownership to promote community and stability. Then, it allowed flippers to go crazy speculating on home price increases, and effectively subsidized the process via Fannie and Freddie. If we had been taxing short-term home owners at a rate near 100% of their profits, it would have killed the flipping market dead, served to keep home prices in check, and encouraged the values that the agencies were designed to uphold.

(Problem is, of course, that this never could have happened -- for the last three years, the sole pillar of our economic growth has been home price increases. There's no way that congress or the White House would have allowed that pillar to be knocked down. Everyone is conveniently forgetting this today, but it's still true.)

That idea is absolutely foolish. What about penny stocks?

This would result in reverse splits and every stock would cost thousands of dollars to minimize this fee. Foreign exchanges would get a huge boost - especially from stocks traded on both exchanges. Your average investor wouldn't be able to have a balanced portfolio and share price would become a huge issue.

It should probably really be a percentage, not a fixed 10 cents.

Adding friction to an otherwise efficient market is the opposite of a solution.

What? That's the whole problem though! The 'efficient' markets fucked up, didn't they?

Not really. The issue is that the efficient markets were allowed to do some things they shouldn't have been, and they did it really well.

Then why does it matter if you slightly affect their efficiency?

This religious Friedmanite bullshit is what got us here in the first place IMHO.

So... "inefficient" markets won't fuck up? Wrong.

This is the wrong argument to be having surely ?

The markets were heavily influenced by the government. Risk was removed because of the GSE status of Fannie and Freddie. At the same time the government (both Congress and the president through HUD) pushed Fannie and Freddie to take on more risk to "help the poor".

That's the idea (I think). Adding friction to discourage zero sum games (day trading), which create volatility. The higher the stock price & longer you investment period, the lower the tax. If you are making $10 a trade on stock (a minimal amount for muulti-year investments in largish companies) it's insignificant.

Did anyone else notice that his math is off? If each sell and buy is taxed at $.10, wouldn't the total tax on a stock transaction be $.20?

A fixed value per stock seems foolish, why not make it a percentage. And, a percentage of the total value isn't very fair (stock values would have to go up significantly for it to be worth buying/selling. So, we'd have to tax just the gains... the capital gains.

Oh right, we already do that. It's called capital gains tax.

Oh right, we already do that. It's called capital gains tax.

No, capital gains tax taxes gains. This will tax losses as well. It seems "unfair", but I think this could prevent people from liquidating "slightly bad" positions that will probably recover.

That's one side of the argument, but it will be punishment on top of loss.

This type of tax is usually called a "stamp tax". China has such a tax, although it's quite low. http://www.china-embassy.org/eng/xw/t428357.htm

More taxing = less investor activity, no?

Yep - but that could arguably be a good thing. Fewer daytraders, more long-term investors, less volatility.

Ding Ding Ding.

Not exactly the effect we're supposed to be going for here is it?

They are broke because WE are broke and we borrowed money to maintain our artificially high standard of living. Basically, both the private and public sectors of America have proven that we have no self-control. Moving money around won't solve that problem.

I'm not going to vote up idiotic articles.

The title screams idiot populism.

Indeed. I'd never heard this "Wall Street vs Main Street" meme until a few days ago, and suddenly it's everywhere.

Judging only the tax itself: it'd have to be a percentage, not a fixed amount.

Tax every single share of stock that is bought and sold 10 cents per transaction. One dime.

That's a lot. Arbitrage and market-making would become much less profitable, and liquidity would dry up, aggravating the mess.

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