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The long-established Security Traders Association (STA; www.securitytraders.org/) caters to the needs of its institutional-type members, including professional exchange-based traders, broker-dealers, banks, money-management firms and pension funds. Although online and self-employed small business traders share some interests in common with institutional traders – such as fighting off the financial-transaction tax – online traders have different priorities and special needs. For example, business traders have to worry about trader tax status (business tax treatment) and Section 475 MTM (tax loss insurance) accounting.

The time is ripe for joining our Traders Association. Washington is bringing about tax and regulatory changes at a fast and furious pace. These changes significantly affect traders and the markets. President Obama won a mandate for change and a new democratically controlled Washington is embracing the same agenda. It’s time to either be part of this change – represented in Washington by our Traders Association – or sit on the sidelines and perhaps fall under attack on new taxes, such as the dreaded potential “financial-transaction tax,” which if enacted could put online and self-employed traders out of business. Learn more about this potential new tax here http://www.greencompany.com/Association/AssociationFinancialTransTax.shtml  .

Our Traders Association will work with the STA and other securities industry organizations to improve and defend many types of tax breaks for traders and investors. We plan to defend and improve our unique tax breaks, such as trader tax status (business treatment), Section 475 MTM, 60/40 tax breaks, capital loss limitations, and more. We certainly need better trader tax status requirements laid out objectively, and relief from escalating IRS attacks on online traders.

Small business retail traders often are on their own (trading from a home office) and face challenges in obtaining mortgage loans and insurance coverage for their families. Institutional traders often receive rich compensation packages including a fixed base salary – reported on W-2 tax statements, which lenders want to see for income verification purposes – plus incentive bonuses based on trading profits. Institutional traders also receive generous employee benefits including health, life and disability insurance policies. Online and self-employed business traders cannot easily document their fluctuating income and often have a hard time obtaining a mortgage and insurance policies. The media has reported that many self-employed businesses can’t obtain home mortgages because a lender isn’t comfortable with the risks of a new small business. Traders often don’t have fixed base salaries in connection with their trading businesses, although this can be arranged with a trading entity and payroll. Some lenders may see through that and others may think it’s just what they need to satisfy their lending requirements.

Our Traders Association can help traders get loans and insurance coverage. We plan to organize a Traders Business Alliance, a business-to-business network of participating lenders, mortgage brokers, insurance companies, equipment and service providers. We envision crafting business standards for traders, instituting an association accreditation program (where you can earn “gold” or other status levels), standardizing and providing support to the application process, and forging special relationships with interested vendors. Our Traders Association can arrange discounts on goods and services using our great numbers of customers too.

Our Traders Association will standardize trading business practices and reporting to fit the needs of our lenders, insurance companies and other vendors. Our standard business practices will include risk management, due diligence, financing and budgeting, business plans, management techniques, and much more. We will offer standardized reporting and application letters to use with each type of vendor. We will have a “members only” content area for tips on working with our different vendors and special rules by state and otherwise.

The Traders Association and Advocacy plans to provide representation for online and small business traders to the media, government officials and the public. Online and business traders are highly educated and have advanced computing skills. They trade with discipline and risk management, procure and develop sophisticated tools and purchase advanced trading and data systems just like institutional traders. The entire trading industry has recently been denigrated by elements in Washington and in the media. As a pretext to new regulations and tax increases, traders everywhere are being castigated as speculators causing spikes in energy prices and company-killing short-sellers. These erroneous and unwarranted attacks show the lack of knowledge of their detractors. It’s our mission to project and promote the positive manner in which traders enrich their lives and benefit industry and society.

A trade association can be defined as an organization founded and funded by businesses of a specific industry, with the main goal being standardization. A trade association engages in public relations activities such as advertising, education, political donations, lobbying, and organizing events for charity (we envision doing all of these activities). Many are non-profit organizations governed by bylaws and a board of directors.

It’s unfortunate that current health-insurance law doesn’t allow association plans. However, Congress and the Obama administration are rewriting health-insurance laws. Hopefully, association plan choices will be one of the new options too. Currently, health-insurance plans are unique to each state and can’t be sold across state lines. Republicans suggest allowing national plans, something our Traders Association is in favor of as well, provided it includes an association plan option. Until we can tackle health insurance changes in Washington and on state levels, our Traders Association will offer resources and content on how to obtain health insurance in your home state. Options include applying for an individual plan, electing temporary Cobra from your ex-employer, or forming an entity and establishing a group plan on the entity (which may cost more but covers pre-existing conditions).

We are founding our Traders Association now and we need your help in creating a name and mission statement, attracting members, interns, and a board of directors, and promoting our new association.

If you’re interested in learning more, joining our Traders Association, being on its board, being a member of our Traders Business Alliance, or helping us in any way, please email us at association@greencompany.com .

Visit our Traders Association section to learn more. http://www.greencompany.com/Association/index.shtml .

August 10, 2009 update: Green's social tax article http://www.greencompany.com/Association/AssociationSocialTax.shtml pre-dated President Obama's campaigns to fix the environment, health care and other social needs. It's still a useful idea. Green's social tax idea also pre-dated the Blue Dog Democrats’ pay-go concept to raise revenue to pay for social spending. Raising revenue from polluters to pay for environmental cleanup is an example of pay go. This is similar to the 2009 Congressional cap-and-trade plan, with one big exception: The "trade" part allows companies to avoid personal responsibility by buying their way out.

Pay go is used in universal health care tax proposals too. One tax proposal, which did not gain traction, was for a "fat tax" or "soda tax" -- a cigarette-type excise (sales) tax charged to customers for buying fat-inducing products. The social tax concept would tax both customers and the manufacturers/sellers of those products (with a surcharge in income tax rates). Many vendors would probably pass on this higher tax to their customers. A fat or soda tax was deemed regressive in nature (falling on the middle-class and poor) and it was probably also defeated by powerful food and beverage special interest groups. That's a shame. Everyone decries America for spending the most per-capita on health costs, which may be in direct correlation to America also having the most obese population in the world. Medical professionals have drawn a direct correlation between obesity and health care costs.

One health care tax proposal argued for using a "financial-transaction tax" -- see our extensive blog coverage of this dreaded tax http://www.greencompany.com/blog/index.php?postid=15 -- to help pay for the higher costs of universal health care coverage. This tax proposal also has not gained traction to date, perhaps because a "trading tax" has nothing to do with contributing to the health-care mess. Plus, the sponsors’ main argument is that the tax would be used to pay for the TARP bail out or the recovery of major banks. TARP repayment has begun and is expected to be paid back in full, so this argument has little merit. Green's article attacking the financial-transaction tax argues that traders had nothing to do with the financial market meltdown -- it was caused by a real estate meltdown with overzealous mortgage brokers, bankers, and investment banks, and irresponsible home buyers -- so why charge traders for the bank bailout costs? Again, the idea behind a social tax is that true culprits should be charged for the social costs.

President Obama and the Democratic Congress have many social spending initiatives -- stimulus, health care, education, and the environment. They have targeted the upper-income and global corporation taxpayers as the people and entities that should pay higher taxes to cover these added social costs. Currently, Congress (with support of the President) proposes a 5-percent surcharge on income tax rates of the upper income. Current upper-income marginal individual tax rates max out at 35 percent. These rates will rise to 39.6 percent when the Bush Administration tax cuts expire in 2011. The new upper-income highest-marginal tax rate becomes 45 percent when the 5-percent tax surcharge (proposed for health care and/or other initiatives) is added. This is 10 percent more than it is now (an increase of 29 percent – as 10 percent divided by 35 percent). When state income tax rates and surcharges are added, in many large states such as California and New York the combined highest-marginal tax rate is over 55 percent. Other payroll and health insurance related assessments may take the true tax rate to well over 60 percent. Again, why tax non-offenders more? Why not use taxation responsibly to hold people and companies accountable for their social costs? President Obama has also advocated personal responsibility.

Those who consume fatty foods and become obese cause much greater health care costs to the community and should pay a higher social tax (“fat tax”). This will encourage people to eat healthier. Everyone should be accountable for his or her actions regardless of class. Access to good, quality foods in poorer neighborhoods should be provided as a part of our nation’s health care coverage. Again, why tax a physician more, force him to make less money in treating patients (part of current universal health care proposals) and relegate physicians to middle class status too? (Green writes about this physician in his article on social tax.)

It's all tied together on the tax-front. Personal responsibility, social initiatives to improve the lives of all, and using government fiscal incentives and rules to help guide good community and personal behavior. Government doesn't have to be the vendor of first resort (which is not it's forte).

Trading is a last-resort business opportunity for many Americans, while manufacturing and service jobs move to lower-cost emerging markets. Trading provides liquidity to society and financial-related income is a backbone of America. Goldman Sachs was just admired (and criticized) for making over $10 billion recently and paying back TARP and large bonuses. The great majority of Goldman's income came from trading activities and governments will collect half of those bonus checks in taxes. Trading is vital to the U.S. Why tax trading to death and make trader tax status and Section 475 MTM so hard for traders to achieve? Trading doesn’t pollute the environment or make Americans unhealthy or obese. Trading rewards the best educated and tech savvy and it's extremely helpful to the displaced, young, at-home parents and retirees. Traders should be rewarded and thanked, not demonized and taxed out of business. Our country doesn’t need more people on the unemployment lines. Trading has been a part of our society for centuries, and now the rest of the world is embracing it as well. Speculation, entrepreneurship, risk and reward, and financial markets are as much a part of America's history and success as the Constitution itself. Don't mess with our investments -- even if they are day investments with more risk management!

We discussed our Traders Association on several conference calls. Click here to listen to our podcasts.

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