Taxe Tobin Maintenant!

by Don Boudreaux on November 27, 2009

in Man of System, Myths and Fallacies, Prices, Reality Is Not Optional, Seen and Unseen, Taxes

Paul Krugman supports a Tobin tax.

The Melbourne Business School’s Sam Wylie, at Core Economics, explains clearly one important reason why such a tax is a bad idea.

And the Denver Post’s David Harsanyi weighs in as well.

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  • Mais non! Pourquoi?

    Je suis Jean-Paul Krugman!

    Merde a tete!

    (ze germans are sehr much more efficient here: Scheisskopf!)
  • brotio
    Wow, this post has been up for at least six hours, and neither Yabbut, or Yasafi have chimed in to defend their Keynesian demi-god.
  • If Krugman supports taxing "socially useless" activities, why not start with campaign contributions and political advertisements?
  • Methinks1776
    Well, if we're talking about socially useless activity, why not start by taxing his column?
  • hylarides
    Taxing politicians at twice the rate they tax everyone else? Hmmm... :-)
  • JeffreyEdelman
    It's funny; I was thinking taxing TV or movies and subsidizing books/reading. I wonder how that would go over, seeing as we're so "globally noncompetitive"........
  • steve
    to reduce speculation here is a thought -- make all trading profits, cash and derivatives, subject to an ordinary income tax rate. then, all profits earned after holding for more than 12 months -- no tax at all. no cap gains tax no income tax it all belongs to the investor. and no using derivatives to synthetically extend or lock in the gains. you will reduce short term activity and release lots of capital.
  • Methinks1776
    Steve, all trading profits ARE taxed at the regular income tax rate.

    investments held for 12 months or more are already tax advantaged.

    Your goal of reducing short term activity can be said another way - reduce liquidity. That will come back to bite those long term holders when it comes time to sell their investment.
  • hylarides
    Idiots! Do they not realize that the only reason that London returned to financial prominence is after the USA increased costs on businesses after SOX and other overt regulations? Do they think the money won't flow to Shanghai, Hong Kong, Brazil, or anywhere else without these transaction costs?

    On top of that, speculators bring in a massive amount of liquidity that help the rest of us normal investors when we want to buy/sell RIGHT NOW.

    On top of this, transactions are already not free. There are costs to trade assets no matter who you go with. They may be trivial in many cases, but they're there. The rest of us benefit from lower costs because of the scale speculators engage in.
  • Methinks1776
    Excellent response.

    Over the past 14 months, the SEC has already increased trading costs severely. As a result, thousands of trading companies simply shut their doors and liquidity has dried up.
  • hylarides
    And to follow up: http://tinyurl.com/yf3fpo9

    sigh. Good for switzerland/asia.
  • Methinks1776
    I can't link to the article. I'm assuming it's about hedge funds fleeing london in favour of switzerland and asia.

    The same thing is happening among U.S. trading companies. Those of us who have not closed are mostly expanding asian operations or entering asia for the first time. We're scaling back operations on U.S. exchanges. The SEC's response? It's seriously considering more poorly thought out, draconian burdens on those who foolishly remain.
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