http://sugarmtnfarm.com/butchershop

The regulations are doable. The facility design and construction are doable. The problem is we can’t get a loan from banks. They keep saying they are not doing any loans for “new or expanding businesses”. We have a detailed business plan, the numbers work, we have a long history of excellent sales and a stack of letters of recommendations from chefs and other customers. But no loans from the bank. To date we’ve been bootstrapping with about $26,000 of money from our own pocket plus about $30,000 in micro-loans from individuals and extended terms from suppliers as well as CSA Pre-Buys of pork from customers. We’re making steady progress and only need about $100K more. We bailed the banks out, among others. It is a shame they won’t even make loans, loans that would help small businesses startup and expand.

-Walter Jeffries
Sugar Mountain Farm
in Vermont

Anyways I basically agree, but I think it would make more sense to only tax stock/bond purchases (so that there’s no negatives to exit your positions).

The technology has improved and costs have come down which allow people to trade in penny increments. It is irrelevant what spreads were twenty years ago. Should we add a 30% tax to computers that are sold because technology has lowered costs to buy a computer. After all you can get a computer 30% cheaper today than a decade ago and people still bought computers back then. Should we put a 50% tax on NBA owners ticket revenues, after all ticket prices were 50% lower 10 years ago and the owners of NBA teams still made money.

Your plan would encourage every publically traded company to enact a 50 to 1 reverse stock split and would wipe out volume. Why would any company with a 10 stock not do a 50-1 reverse split to put their share price at 500 so someone who wanted to invest now would owe a 10 cent tax on 1 share instead of a $5 tax on 50 shares. This would wipe out small investors and severely dry up liquidity, not to mention all the volume would go to foreign exhanges, thus only causing more of an exodus of US jobs.

Why should the fruits of a trader’s profits, whose capital gains will be taxed at ordinary income levels, be redistributed to someone who wants to start up a business. What makes you believe someone who wants to start a business will be able to better spur the economy with someone else’s money, than the person who actually earned it would be able to spur the economy. This is the failed Obama/Keynsian idea that govt can create jobs through redistribution and we can print and borrower are way to prosperity. You may say that trading provides no economic benefit and that is tough to argue, but under the current boom/bust cycle the Fed has created and the debasement of the currency coupled with negative real risk free savings returns people are forced to risk and speculate with their savings versus sit in cd’s, money markets, etc at 1% interest.

The problem with the economy can be outlined below in this chart courtesy of Karl Denniger at the Market Ticker:

http://market-ticker.denninger.net/uploads/Dec2009/Absolute-Debt-GDP-9-09.png

Until the debt is liquidated their is nothing that can be done to create jobs and get the economy back on track you can tax traders, nba tickets or whatever but the bigger problem of too much debt in the system will still halt any sustainable economic growth. It is not that businesses/consumers cannot get loans, banks are begging to hand out credit, the difference this time is people actually have to have the ability to service debt now, and the pool of people with the ability to properlly service debt has shrank dramatically.

From MC> lets face the realities of day traders. First, its 100pct risk. You know it going in, and just hope you come out ahead. But if you are a day trader, thats what you do. I dont think the number of traders falls. Plus, you wouldnt pay a tax at the end of the year. It would be part of the spread and paid by the broker, exchange or market maker. It would just be a cost of the transaction. You wouldnt know or care how much you paid in that tax any more than you pay attention to how much you paid to the exchanges in fees, or to market makers in spreads.

I also believe that if Im wrong and volume falls materially, the brokers who cater to day traders will come up with a variety of ways to offset the cost to maintain volumes.

Markets react. Companies would start by enacting reverse splits so we would see a lot fewer stocks trading under $1 … probably under $5 & $10. Brokerage firms would also break away from 100 share round lots.

Interesting proposal however.

I do agree it would be intriguing to have tax-free small businesses, but as a CPA I think there would be a much higher amount of revenue lost than you realize.

I’m an entrepreneur, manager at an internet business, employing more than 100 people after 6 years in business. I’m located in a medium-sized midwestern town. Our company has purchased literally thousands of computers in developing the business. We’re among the highest paying employers in the town, and one of the largest commercial leaseholders. So much for my credentials. Did you ever know someone, a business acquaintance, perhaps, who was impressive in the breadth of his knowledge, a seeming genius, always holding forth on this or that topic as if an expert at all things. One whom you grew to trust as a source of interesting knowledge of the world, as a fount of clever ideas. And then one day, that person wanders into your area of expertise, something you really understand, and you suddenly become aware that the same glib style, the same air of know-it-all that seemed so genuine and believable when applied to something you yourself did not know, is utter baloney. That this person knows literally nothing about which he is so believably blathering. You, sir, have achieved that quality for me. I have enjoyed reading your comments, hearing your ideas, and I have defended your behaviors to my colleagues in spirited arguments. You see, the business I’m in is a trading business, creating value in ways you apparently could never understand. Your suggestion for taxing financial transactions makes about as much sense as an ex post facto law to clawback all the profits of any person who made more than $100M during the internet boom. Know what I mean? Or how about a tax on tickets to that gem of American productivity and value, NBA games. The trading business is now often a small firm, entrepreneurial niche in our economy, one that you would trample willy-nilly out of incredible ignorance. Get a clue, bro, the tax you suggest would reduce trading volumes by 50% on day one, and your specious calculation of the expected tax revenues is a bad joke. I just love people who say out of one side of their mouth that tax holidays are a great idea to stimulate their favorite ideas, however dimly understood. Because without exception, they want to pay for these schemes by increasing the taxes on businesses they don’t favor, or simply don’t understand, like you.