Traders Tax Bill

You may have heard or seen the bill that’s now in the House of Representatives which proposes to place a ¼% transaction tax (a stamp tax) on every trade you do. That means it will cost you ½% round trip to do a trade. The writers of the bill state it will pay off a good amount of TARP and also the income will be used to fund some health initiatives.

Obviously if this bill is passed, its game over for active trading, the exchanges (especially the CME) and many of the online brokerage firms who rely upon trading volume to grow their businesses. This bill if passed will cause serious damage to the financial markets.

The bill is beginning to catch some headwind as it's fashionable, but in my opinion it won’t pass. Here’s why.

1. The bill was written by people who had nothing to do with the current stimulus bill.
2. As I understand this, this would eventually get past Senator Charles Schumer from New York. Without me passing judgment, he has fairly close ties to the financial markets industry and understands the devastation this will do to his constituents in New York.
3. Our President is from Chicago, the trading derivatives capital of the world. I’m sure he better understands how much damage this bill will cause.

Most large problems usually start as small problems and its best to attack problems when they’re first small. This one is small right now and can be eliminated early. Here is the link to the Petition to block the Traders Tax Bill. After you sign it, please send this to as many of your friends in the industry that you know. The petition was just recently put up and already nearly 30,000 people have signed it. The more people who sign this, the better.

Click here for the Petition to Block the Traders Tax Bill