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Mikhail Liebenstein

Sarkozy To Press For 'tobin Tax'

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http://news.bbc.co.uk/1/hi/business/8264774.stm

Interesting article. Imagine if this happened - very angry banksters.

Ha ha ha ha

They come up with all these schemes and each time they miss the point.

Some things called 'trade' are wealth creating while other 'trades' act to inflate costs and do nothing else

They wont make the distinction, so nothing they will do will solve the problem and do no damage

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http://news.bbc.co.uk/1/hi/business/8264774.stm

Interesting article. Imagine if this happened - very angry banksters.

Although, we already have stamp duty which is a (substantial) tax on every transaction involving stocks and shares (at least in the UK).

Doesn't seem to have done much to quell speculation in the UK stock market. Certainly not if you believe all the fuss about the shorting of HBOS shares a couple of years ago. Also doesn't seem to have done much to quell speculation in residential property.

Taxing individual transactions doesn't really quell speculation because it isn't expensive enough - it also impedes genuine market making, and makes price discovery less efficient. So, I'm not sure that simply taxing each transaction is a useful intervention.

What would be a better approach would be to tax transactions which have been unproductive or risk causing harm, or simply carry excessive risk to counterparties.

E.g. Raise capital-gains tax to an extremely high level (e.g. 80%) but provide a taper relief (dropping to the rate of income tax after, e.g. 10 years) and a relief for indexation. No other allowances permitted (e.g. family home would not be CGT free - and the tax man takes priority over any 2nd charge, so if the property is remortgaed, the CGT bill would have to be estimated by the lender when working out how much security they had in the property). The indexation relief will allow people to protect wealth from inflation, and encourage the government to keep inflation as low as possible, and the taper relief would encourage long term investment. The very high short term gain rate, would very strongly discourage speculation - especially, if the ability to offset one capital gain by a capital loss in another trade was limited (e.g. only 75% of any capital loss is allowable on a future capital gain) - and would also discourage equity withdrawral during aberrant periods of excessive (above indexation) price rise, minimizing the risk of negative equity.

E.g. Tax leverage - Tax leveraged portfolios - e.g. at 0.1% x (leverage ratio - 1). E.g. buy an investment property with an LTV of 90% (levered 10x) - pay tax at 0.9% of the property's value per year.

E.g. A 'high leverage' penalty tax - LTV over 90%, pays a special 'high risk investment' tax - e.g. an additional 1% of the investment's total value per year.

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The leaders of the world are like vultures, picking over the dead corpse of the banking sector. Hoping to take the best bits home to their country, while leaving the offal for the less discerning pallet.

They will never agree to anything, as their greed will get in the way, as usual.

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