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Traders Tax: H.R. 4191 (H.R. 1068) in Congress Now


I don't post in here often, but look through the forum here a lot. I just got an email an about this new traders tax bill in Congress now. From what I understand this could ruin day trading for everyone.

The email had a link to go to and sign a petition to send to U.S. Congress.

I just signed the petition and figured all the traders in here would want to as well as it is very important they don't pass this bill.

www VoteNo1068 com (this link no longer works so disabled)

edit: Link to H.R. 4191 http://www.govtrack.us/congress/billtext.xpd?bill=h111-4191
Here is another interview about trader taxes on Fox Business News: Rep. Peter DeFazio defends trade tax.
Hitting close to home now. I have 2 little mouths to feed and there is no way I could stay in biz with that kind of nonsense communistic crap. And lets face it I can't put on a tool belt anymore and go back to building theres nothing to build.....They might as well shut the doors to the NYSE, and cut the computers down at the CME.
0.25% per trade what is that on the ES? What is that 0.25% of the margin of the ES my brokers rate is 6250.00? Thats an extra 15 bucks per contract. I make 5-30 round trips of 1-10 lots a day every day. The math is staggering, shocking, thats $2250 on a high trade day, 589k a year. I generated a large amount of my income from scalping the NQ's....there is no way.... you would have to make 1 point to break even, plus commision, plus slippage.
It is more staggering and shocking than you think. I believe the tax is based on the value of the contract, not the margin amount. That means with the ES at 800, the tax would be $100 on 1 contract. Absolutely ridiculous. I'm confidant it won't pass, but everyone should sign the petition anyway.
This is the 3rd time it has come up, 2nd time as a stand alone bill and once attached to another bill. Each time he gets one more rep to sign on. I think he is up to 7 listed sponsors which doesn't seem like many but it is considering most bills that pass only have 10-15 listed sponsors...

It will put me out of business for sure.
I am a resident of Wisconsin and wrote to my Senators and my Congressman about this. Here is the reply I got from one of my Senators:

Dear Mr. :

Thank you for contacting me with your thoughts about a
tax on securities transactions. I appreciate hearing from you and
welcome this opportunity to respond.

On February 13th, 2009, Representative Peter DeFazio (D-
OR) introduced H.R. 1068, Let Wall Street Pay for Wall Street's
Bailout. This bill would impose a tax on certain securities
transactions to recover the net cost of the Troubled Asset Relief
Program, authorized by Congress in the Emergency Economic
Stabilization Act of 2008. The percentage of this tax would not
exceed 0.25% of each securities transaction.

Similar legislation has not been introduced in the Senate.
However, please be assured that if the bill does reach the Senate
floor I will keep your thoughts in mind. Again, thank you for
contacting me, and please feel free to do so in the future.

Sincerely,

Herb Kohl
U.S. Senator

What concerns me about this is his comment stating that "the tax would not exceed .25%" of the value of transaction. It is if he is minimizing the impact of it and in spite of supposedly being a business man (having made his fortune in the low margin grocery business and he owns the Milwaukee Bucks), he doesn't realize that it would likely put many local pit traders, and many if not most screen traders, out of business. There seems to be no recognition of the market liquidity value these traders provide which make the markets more efficient. Make your own judgment but the tone of the response (which I am sure is a form letter type response) to me is one of implicating or condemning all traders for the sins of those who caused the financial meltdown (including our elected representatives and non-elected regulators). I am sure this would be considered a popular response to the average, uninformed person on the street who believes Wall St. should be crucified and "pay for its own bailout."

If you haven't already I suggest that you do more than just sign a petition. Call or write to your elected reps.
Please feel free to correct my math here:

The value of one ES contract is 50 times the underlying index price, so if the index is trading at 800, the value of one ES contract is $ 40,000. Applying the new 0.25% transaction tax we have:

$40,000 * 0.25% = $ 100 per transaction

One round turn trade represents 2 transactions (1 buy and 1 sell).

Trader Tax = $100 * 2 = $ 200 per round turn


Can E-Mini scalpers collect unemployment ?



PT, yes that is the math I posted elsewhere, and I believe would be correct based on the tax rate figures given. And to make it even more infuriating, I suspect they will 'exempt' big financials from the tax (this was done in other countries when a tax like this was imposed, if my research is correct), leaving it all on us small traders. Imagine that, a tax to 'punish' Wall St. for what they did, imposed on the little guy and leaving the 'ones to blame' exempt. Now that's justice. Same old, same old.
Could I open off shore accounts and trade the Dax, and stoxx50 from those accounts and bypass the traders tax? wouldn't it just be taxed on a capital gains tax basis? Or maybe start forex trading, I have not seen anything talking about the traders tax hitting forex market. IF this goes through what are you guys who trade for a living like myself going to do? I could start maybe holding for 2-5 days, but my concern is how is this going to effect the eminis that I trade were it seems 95% of the ticks is from daytraders trading 10 or less making many trades a day. It seems the eminis will dry up at least over time...
quote:
Originally posted by pt_emini

Please feel free to correct my math here:

The value of one ES contract is 50 times the underlying index price, so if the index is trading at 800, the value of one ES contract is $ 40,000. Applying the new 0.25% transaction tax we have:

$40,000 * 0.25% = $ 100 per transaction

One round turn trade represents 2 transactions (1 buy and 1 sell).

Trader Tax = $100 * 2 = $ 200 per round turn


Can E-Mini scalpers collect unemployment ?









$200.00 x 5cons (my average size) x 15 trades a day = $3,930,000.00 a year. And G. Washington got pissed at a 3% tea tax LOL its so messed up its funny....Look at the bright side with this kind of money going to the hill, it want take long for it to pay the 100 billion off.
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