[blueash]

A modest proposal. As the Covid crisis continues there will be more rescue bills coming to help individuals and businesses. At the same time, income into the treasury is dropping as income and sales taxes and import taxes all decrease. The trillions of new debt have not been offset by any decreases in spending, domestic or military. So other than leaving the bills for our grandchildren, is there any way to perhaps repay our government, which is ourselves?

According the World Bank, the value of stocks traded in the US in 2018 was

33,027,245,670,000

Round that off to 33 trillion. I propose a stock trade tax of two tenths of one percent. That means you will pay 2 pennies in tax for every 10 dollars in value you trade. Considering that recently the market goes up and down several percent daily, a 0.2% difference is tiny.
If you sell one million in stock value, you pay a tax of two thousand dollars. Not much of a hit. You pay 7% to sell your house to the agent.

Here's the great part. 33 trillion in sales times 0.2 percent generates 66 billion in tax revenue. Keep in mind of course that this is doubled as the buyer also has a stock trade tax of the same amount. So 132 billion in tax revenue per year.

It won't pay off the debt entirely, but it is a nice dent. It covers nearly 1/3 of the Federal interest payments on the debt. Make the tax 1% and you totally cover the interest on the debt and begin to reduce the principle. Can we ask our stock traders to pay 1% for this national emergency? Or do we leave it for our grandchildren?

[tophcfa]

Originally Posted by blueash

A modest proposal. As the Covid crisis continues there will be more rescue bills coming to help individuals and businesses. At the same time, income into the treasury is dropping as income and sales taxes and import taxes all decrease. The trillions of new debt have not been offset by any decreases in spending, domestic or military. So other than leaving the bills for our grandchildren, is there any way to perhaps repay our government, which is ourselves?

According the World Bank, the value of stocks traded in the US in 2018 was

33,027,245,670,000

Round that off to 33 trillion. I propose a stock trade tax of two tenths of one percent. That means you will pay 2 pennies in tax for every 10 dollars in value you trade. Considering that recently the market goes up and down several percent daily, a 0.2% difference is tiny.
If you sell one million in stock value, you pay a tax of two thousand dollars. Not much of a hit. You pay 7% to sell your house to the agent.

Here's the great part. 33 trillion in sales times 0.2 percent generates 66 billion in tax revenue. Keep in mind of course that this is doubled as the buyer also has a stock trade tax of the same amount. So 132 billion in tax revenue per year.

It won't pay off the debt entirely, but it is a nice dent. It covers nearly 1/3 of the Federal interest payments on the debt. Make the tax 1% and you totally cover the interest on the debt and begin to reduce the principle. Can we ask our stock traders to pay 1% for this national emergency? Or do we leave it for our grandchildren?

It wound not be the stock traders that pay this tax, it would be the investors as the trading tax will be passed through. Everyones 401k plan that holds mutual funds owing stocks will be taking the hit. In non 401k/IRA accounts, money that people have invested in stocks was already taxed as income before it was invested.

[tophcfa]

I have a novel idea. Once the covid 19 thing is behind us and the economy normalizes, how about getting back to the good old days where the government runs a budget surplus during good times and uses the surplus to pay down debt.

It's called fiscal responsibility, and it involves cutting spending, not looking for ways to tax people. Defecit spending is acceptable during crisis times like we are now in, but is unsustainable when done year after year as has become the new norm.

[skyking]

But it would hit the day traders the hardest. That's not bad.

[rustyp]

Originally Posted by skyking

But it would hit the day traders the hardest. That's not bad.

FYI - Day Trading rules have changed substantially. They are taxed pretty much as you and I at a real job. Any profit from a trade held less than 30 days is taxed as income not capital gains. Then there is another thing called the wash rule which in essence limits loopholes that show loses on paper for the purpose of ducking taxes.

I'm not discounting the idea of taxing the market but in reality it would be hard to target a group that ultimately doesn't get back to the little guy - example pension funds and 401Ks.

One thing for sure we will pay one way or another but how and when. Pray that it won't be in the form of inflation which would hit the retired class the hardest.

[retiredguy123]

Originally Posted by rustyp

FYI - Day Trading rules have changed substantially. They are taxed pretty much as you and I at a real job. Any profit from a trade held less than 30 days is taxed as income not capital gains. Then there is another thing called the wash rule which in essence limits loopholes that show loses on paper for the purpose of ducking taxes.

I'm not discounting the idea of taxing the market but in reality it would be hard to target a group that ultimately doesn't get back to the little guy - example pension funds and 401Ks.

One thing for sure we will pay one way or another but how and when. Pray that it won't be in the form of inflation which would hit the retired class the hardest.

Just to clarify, if you sell a stock within a year of purchase (not 30 days) the gain is taxed at your ordinary income tax rate. Also, the wash sale rule is not new. It has been in effect for almost 30 years.

[gatorbill1]

How about reversing last year's tax cut??

[retiredguy123]

Originally Posted by gatorbill1

How about reversing last year's tax cut??

Are you referring to the tax cut bill in 2017? I don't think there was another tax cut last year.

[Chi-Town]

How did we pay for it 10 years ago?

[jebartle]

Originally Posted by tophcfa

I have a novel idea. Once the covid 19 thing is behind us and the economy normalizes, how about getting back to the good old days where the government runs a budget surplus during good times and uses the surplus to pay down debt.

It's called fiscal responsibility, and it involves cutting spending, not looking for ways to tax people. Defecit spending is acceptable during crisis times like we are now in, but is unsustainable when done year after year as has become the new norm.

Let me see, how many years ago were we deficit free, I know, do you, hmmmmmm!

[retiredguy123]

Originally Posted by tophcfa

I have a novel idea. Once the covid 19 thing is behind us and the economy normalizes, how about getting back to the good old days where the government runs a budget surplus during good times and uses the surplus to pay down debt.

It's called fiscal responsibility, and it involves cutting spending, not looking for ways to tax people. Defecit spending is acceptable during crisis times like we are now in, but is unsustainable when done year after year as has become the new norm.

I totally agree. But, I think we are part of a very lonely group. It looks like the national debt will soon exceed $30 trillion dollars, which is about $94,000 for every person in the country.

[graciegirl]

I think in the areas of science and finance...……..

People should stick with the area they're good at.

[blueash]

I am not suggesting taxing based on whether your trade generated a gain or a loss, or how long it was held or whether it is in a 401K or a Roth. I am suggesting a tax on the transaction itself. Hold your stock that you have. No tax until you sell it. When I used the term stock trader I meant the tax is applied to the person who is buying the stock or selling. I didn't mean E-trade where they would then "pass it on" to the user. I mean that investors is the same as stock trader in my suggestion.

I do believe that the company used to place the transaction should be responsible for collecting the tax, then they would send it on to the gov't. It would be no different than what now happens with your sales tax being collected at the point of sale then sent on to the gov't.

Example: I buy $ 10,000 of XYZ at 100/share. If Etrade charges a 4.95 trade fee. My Etrade account then will show that there was deducted $10,024.95 from my cash available. Etrade keeps the 4.95 and sends the 20 to the gov't. This is at the 0.2% rate.

[retiredguy123]

Originally Posted by blueash

A modest proposal. As the Covid crisis continues there will be more rescue bills coming to help individuals and businesses. At the same time, income into the treasury is dropping as income and sales taxes and import taxes all decrease. The trillions of new debt have not been offset by any decreases in spending, domestic or military. So other than leaving the bills for our grandchildren, is there any way to perhaps repay our government, which is ourselves?

According the World Bank, the value of stocks traded in the US in 2018 was

33,027,245,670,000

Round that off to 33 trillion. I propose a stock trade tax of two tenths of one percent. That means you will pay 2 pennies in tax for every 10 dollars in value you trade. Considering that recently the market goes up and down several percent daily, a 0.2% difference is tiny.
If you sell one million in stock value, you pay a tax of two thousand dollars. Not much of a hit. You pay 7% to sell your house to the agent.

Here's the great part. 33 trillion in sales times 0.2 percent generates 66 billion in tax revenue. Keep in mind of course that this is doubled as the buyer also has a stock trade tax of the same amount. So 132 billion in tax revenue per year.

It won't pay off the debt entirely, but it is a nice dent. It covers nearly 1/3 of the Federal interest payments on the debt. Make the tax 1% and you totally cover the interest on the debt and begin to reduce the principle. Can we ask our stock traders to pay 1% for this national emergency? Or do we leave it for our grandchildren?

So, you raise $132 billion for the year, and Congress spends it in a minute. What have you accomplished?

[blueash]

Originally Posted by tophcfa

I have a novel idea. Once the covid 19 thing is behind us and the economy normalizes, how about getting back to the good old days where the government runs a budget surplus during good times and uses the surplus to pay down debt.

The last time the US gov't had a surplus was a stretch from 1998, 99, 2000, and 2001. Every other year from 1970 to 1997, and every year from 2002 - now have run at deficits. Those 4 good years should be credited to both parties. Clinton was President and the GOP controlled Congress. They actually worked well together on economic issues. Both sides gave in on things they would have liked.

In 2001 the laws were changed because of a belief then that the gov't should not have a surplus and the money should be returned to the people.
As President to be Bush wrote in 1999 :

"There are only two things that can be done with a surplus. It can be used by government, as the president [Clinton] proposes. Or it can be used by Americans, to save and build and invest. As you can see from this tax plan, I have made my choice. I choose the creation of wealth, over the care and feeding of government."

Since the tax changes of 2001 were enacted, no surplus has occurred, no paying down the debt. Additional significant unanticipated costs have also created debt, 9-11, the Iraq and Afghan wars, Medicare expansion to cover drug costs, and more. And more tax cuts.

So I am offering for your consideration a tax increase. I know in some circles there is never a reason to increase taxes. I actually believe in taxation and in trying to get it equitable. Gracie thinks I should only offer opinions on medicine. Fair enough. But I'd even like to hear hers about a stock transaction tax. I'd have no problem with wording in the legislation limiting the income from this tax to use in lowering the debt for those who worry it would just be diverted into general funds.