It’s too much for some transactions, and too little for others. For high-frequency (or mid-frequency) trading, 1% of the transaction is 3 or 4 times the expected value from the trade. For high-margin sales (yachts or software), 1% doesn’t bring in enough revenue to be worth bothering (this probably doesn’t matter unless the transaction tax REPLACES other taxes rather than being in addition to).
It also interferes with business organization—it encourages companies to do things in-house rather than outsourcing or partnering, since inside-company “transactions” aren’t real money and aren’t taxed.
It’s not a bad idea per se, it just needs as many adjustments and carveouts as any other tax, so it ends up as politically complicated as any other tax and doesn’t actually help with anything.
For high-frequency (or mid-frequency) trading, 1% of the transaction is 3 or 4 times the expected value from the trade.
I’m very much not sure discouraging HFT is a bad thing.
this probably doesn’t matter unless the transaction tax REPLACES other taxes rather than being in addition to
I imagine that it would replace/reduce some of the other taxes so the government would get the same amount of money.
it encourages companies to do things in-house rather than outsourcing or partnering, since inside-company “transactions” aren’t real money and aren’t taxed
But normal taxes have the same effect, don’t they?
It’s too much for some transactions, and too little for others. For high-frequency (or mid-frequency) trading, 1% of the transaction is 3 or 4 times the expected value from the trade. For high-margin sales (yachts or software), 1% doesn’t bring in enough revenue to be worth bothering (this probably doesn’t matter unless the transaction tax REPLACES other taxes rather than being in addition to).
It also interferes with business organization—it encourages companies to do things in-house rather than outsourcing or partnering, since inside-company “transactions” aren’t real money and aren’t taxed.
It’s not a bad idea per se, it just needs as many adjustments and carveouts as any other tax, so it ends up as politically complicated as any other tax and doesn’t actually help with anything.
I’m very much not sure discouraging HFT is a bad thing.
I imagine that it would replace/reduce some of the other taxes so the government would get the same amount of money.
But normal taxes have the same effect, don’t they?
It’s not just the “bad” HFT. It’s any very-low-margin activity.
Nope, normal taxes scale with profit, not with transaction size.