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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
Jim,

What action are you talking about? I don't have too many many friends in high places as most people so what could the avg retail trader do? If all the retail traders and floor traders were to take a week off in protest dry up all the non institutional volume. There would be nothing left but erratic block trading...seems there could also be a way to run this on simulation, that is take out all the tick data less than 100 contracts and run those numbers and make a mock session. I don't know just throwing ideas out there because they can just not open mail/email.
Well, Joe, I wish I knew. I just know that if all we do is post in here and update the progress of this thing, we are doomed. I guess I suggest posting anywhere and everywhere we can. Tell everyone. Show an assessment of how this may affect investors. Do like you said, call your representative, and keep calling, asking for updates on how they are representing you on this as a constituent. Make sure every last person you know has went to one of the websites and sent a letter to their representatives.

How about calling your brokers and asking them if they may not be amenable to some type of cooperative effort, since they stand to lose plenty. How about contacting the big quote vendors and such, like eSignal, and places like NinjaTrader. Imagine their businesses if this passes. They have a huge vested interest. Ask them what we can do to get organized and work together to have our voices heard.

The powers that be just don't understand how many jobs are at stake, as all these places start to fall, one by one. If there was a way to get all the voices heard, maybe we stand at least a snowball's chance in hell of fighting this. If we stand by, we are at the mercy of people who have no understanding of the real market world at all, in my opinion, and we all fall. At least let's start with this. I'd love for others to post additional ideas that I haven't mentioned.
I called my broker in Chicago and well he is as naive in this case as I am."HR1068 what that... UH OH." I even tried talking with a few in Toronto and they too have the same response. Ticks are ticking away and we are going to be unemployed. Don’t we have other options to trade like an index in some other country??? We still have time to develop a trade style/ statergy for a new derivative.
Originally posted by ak1

Please Vist:
http://dandelionsalad.wordpress.com/2009/11/11/a-little-populist-retribution-making-wall-street-pay-its-fair-share-by-dr-ellen-brown/

A Little Populist Retribution: Making Wall Street Pay Its Fair Share by Dr. Ellen Brown

"Gambling is an addiction, and the addicted need help. A tax on these microsecond trades could sober up Wall Street addicts and return them to productive labor, and transform Wall Street from an out-of-control casino back into a place where investors pledge their capital for the development of useful products."


Thanks for posting this ak1, I wanted to inject this into the conversation because this is the fundamental argument being pushed by the Progressives. They are taking advantage of the current "witch hunt" climate to promote and advance this agenda.

I am not a progressive, and please correct me if I am wrong, but the basic point they are making is that traders and investment bankers (GS) are hoarding available financial capital and not allowing that capital to flow out into the real economy. Their comments imply that short term trading is a way to "game" the financial system for our own personal benefit at the expense of the general economy (the greater good). They want the capital currently "tied up" in short term trading to be released into the economy for constructive long term growth (building companies and creating jobs). For example, a small independent trader currently operating their trading business from home, can take their working capital out of their trading account and invest that money in opening a small local retail outlet or perhaps start a pizza restaurant (anyone have any good recipes?). I guess GS can shut down their trading desks (black boxes) and flow that working capital away from the NYSE and into a hands-on venture capital business model ?

Another concern I have is the inflammatory words being tossed out this week. In one earlier post we saw the progressive congressman state that FX traders are "tax cheats" that must be hunted down and brought to justice, and in this above link the author associates trading with gambling, stating that traders are addicts in need of an intervention.

Hopefully everyone likes hot dry desert weather, I have a feeling we may all be relocating to Dubai soon.
Jim: I get two responses...

1. Ignorance. This is the first they have heard of the proposal. After this week on Capitol Hill, this response is moot.

2. Denial. The "there is no way they will do that..." types of responses.

I think what your trying to do is push the discussion past 1 and 2, to phase 3, which unfortunately given the speed with which all these major overhauls of the US economy are coming, may be the "Panic" phase when parties with a vested interest wake up some Sunday morning and discover the language on page 1542 paragraph 3, sub-section 8.a which was passed by Congress at 2am that morning put's them (us) out of business.
So that puts us back to my initial question i.e.in which country do we find Emini type future contracts like the ones we trade here. Lets go there and continue our journey.Let the HR1068 do what ever it wants to do minus us.
Originally posted by pt_emini

Jim: I get two responses...

1. Ignorance. This is the first they have heard of the proposal. After this week on Capitol Hill, this response is moot.

2. Denial. The "there is no way they will do that..." types of responses.

I think what your trying to do is push the discussion past 1 and 2, to phase 3, which unfortunately given the speed with which all these major overhauls of the US economy are coming, may be the "Panic" phase when parties with a vested interest wake up some Sunday morning and discover the language on page 1542 paragraph 3, sub-section 8.a which was passed by Congress at 2am that morning put's them (us) out of business.
I think you're right, PT. I guess I am at the panic state myself, with whatever it is, maybe 33,000 hours of my life invested in this, and many of you out there maybe even more, and it's all going to be gone for no good reason.
Originally posted by ak1

So that puts us back to my initial question i.e.in which country do we find Emini type future contracts like the ones we trade here. Lets go there and continue our journey.Let the HR1068 do what ever it wants to do minus us.
ak1, from what I can see, unless you actually move to that country, and possibly even having to renounce your U.S. citizenship, you will still owe the tax. It may even be that if it is a U.S. instrument and you trade it from overseas you owe the tax. You can trade something like the DAX from overseas, but likely all the other countries will follow suit, and that will be out. Then again, I'm not really ready to move outside the U.S. quite yet.

But here's the thing. No way, no how, can I imagine ever that GS will have to pay this tax, only we will have to pay it. Imagine mutual funds, which rebalance all the time. Let's look at two quick scenarios. The first is GS has to pay it like everyone (Hah!). I would guess the DOW would fall 5,000 points the first week. Yes, 5,000, not 500. I'm serious. On the other hand, maybe not, maybe it goes up, because when there is essentially no volume it is easy to manipulate it up. So, it depends if it incites liquidation or not. I don't see how it wouldn't. Imagine if we are doing say a paltry billion shares a day now and that drops to 100 or 200 million! Imagine that kind of total volume! The unintended consequences here are beyond comprehension.

Scenario two is GS does HFT and such as usual, and we are all out of business. The market, like an ecosystem, becomes completely out of balance, and prone to all sorts of problems. Liquidity is not 'deep', and it's just the machines gaming the system for rebates, all day long. Mutual funds are gone, investors are gone, liquidity providers are gone. It won't take long for some really unfathomable things to happen, like huge drops, or even 5,000 point up days, who knows. Again, profound unintended consequences, I think.

My better half, she says they may pass it, but then repeal it in panic as the markets implode. Although repeals are pretty rare, say they did. Will all the support companies we rely on still be in business at that point? Our quote vendors, trading platforms, brokers, and so on? I doubt it. I think they will fall very fast as revenue dries up. They won't be able to 'go right back in business' if this is repealed, in my opinion. So, even that scenario scares me.

I think we are at an historic crossroad here, and as PT said, it's all just a witch hunt. And, as usual, I strongly suspect this will raise the profit levels of the 'bad guys' by eliminating more competition, and allowing them to even further game the system. And maybe nothing can stop this insanity...
Jim,

I think may be panicking for nothing. This bill has not even been passed by the sub-committee. There isn't enough cosponsors to even begin a debate on a vote there's only 13 cosponsors they need 60. The latest major action was last February when it was referred to the house committee. The vast majority of bills never even make it out of committee. If you study Defazio he has been pushing this since 1991 and it never makes it past the sub-committee. They can't sneak this in any other bill like William Wilberforce did in 1700's because the sub-committee is there for such. There is very large trading firms that are taking appropriate action...Morgan, Credit Suisse, and the Securities Traders Association. Basically there are far more that oppose this than are for it, both in the committee and the house and senate.
And its not like they can lump this bill in with another and vote on it....The idea is dead on arrival in congress since carter, and that was way before I was born. Its dead on arrival because they believe it will effect liquidity. I really don't see any reason for concern. Because the bill is NOT in Congress, as I once thought, again it has not even been approved from the house sub-committee, if it does it gets debated in the house, then voted and then voted in the Senate. Which it is no where near...there's just to much opposition.
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