Let Wall Street Pay for Wall Street's Bailout Act of 2009 (Introduced in House)

[brownsfan019 17]

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1068.IH:

 

Let Wall Street Pay for Wall Street's Bailout Act of 2009 (Introduced in House)

 

HR 1068 IH

 

111th CONGRESS

 

1st Session

 

H. R. 1068

 

To amend the Internal Revenue Code of 1986 to impose a tax on certain securities transactions to the extent required to recoup the net cost of the Troubled Asset Relief Program.

 

IN THE HOUSE OF REPRESENTATIVES

 

February 13, 2009

 

Mr. DEFAZIO (for himself, Mr. WELCH, Ms. SUTTON, Mr. CAPUANO, Mr. WU, Mr. STARK, Ms. DELAURO, and Ms. EDWARDS of Maryland) introduced the following bill; which was referred to the Committee on Ways and Means

 

A BILL

 

To amend the Internal Revenue Code of 1986 to impose a tax on certain securities transactions to the extent required to recoup the net cost of the Troubled Asset Relief Program.

 

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

 

SECTION 1. SHORT TITLE.

 

This Act may be cited as the `Let Wall Street Pay for Wall Street's Bailout Act of 2009'.

 

SEC. 2. FINDINGS.

 

Congress finds the following:

 

(1) The Bush Administration allocated the first $350 billion of TARP funds in a manner that has outraged the Nation by failing to provide the most basic oversight of the funds.

 

(2) Congress has declined to block the remaining $350 billion of TARP funds despite the lack of oversight and the record fiscal year 2009 budget deficit estimated at $1.2 trillion.

 

(3) The Board of Governors of the Federal Reserve System has committed more than a trillion dollars to stabilize the economy by bailing out various banks deemed `too big to fail'.

 

(4) The $700 billion TARP fund and the new Federal Reserve lending facilities were created to protect Wall Street investors; therefore, the same Wall Street investors should pay for this infusion of taxpayer money.

 

(5) The easiest method to raise the money from Wall Street is a securities transfer tax, a tax that has a negligible impact on the average investor.

 

(6) This transfer tax would be on the sale and purchase of financial instruments such as stock, options, and futures. A quarter percent (0.25 percent) tax on financial transactions could raise approximately $150 billion a year.

 

(7) The United States had a transfer tax from 1914 to 1966. The Revenue Act of 1914 (Act of Oct. 22, 1914 (ch. 331, 38 Stat. 745)) levied a 0.2 percent tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help overcome the budgetary challenges during the Great Depression.

 

(8) All revenue generated by this transfer tax should be deposited in the general fund of the Treasury of the United States, scaled to meet the net cost of these bailouts, and phase out when the cost of the bailouts are repaid.

 

SEC. 3. RECOUPMENT OF DEFICIT ARISING FROM FEDERAL BAILOUT.

 

(a) In General- Chapter 36 of the Internal Revenue Code of 1986 is amended by inserting after subchapter B the following new subchapter:

 

`Subchapter C--Tax on Securities Transactions

 

`Sec. 4475. Tax on securities transactions.

 

`SEC. 4475. TAX ON SECURITIES TRANSACTIONS.

 

`(a) Imposition of Tax- There is hereby imposed a tax on each covered securities transaction an amount equal to the applicable percentage of the value of the security involved in such transaction.

 

`(b) By Whom Paid- The tax imposed by this section shall be paid by the trading facility on which the transaction occurs.

 

`© Applicable Percentage- For purposes of this section--

 

`(1) IN GENERAL- The term `applicable percentage' means the lesser of--

 

`(A) the specified percentage, or

 

`(B) 0.25 percent.

 

`(2) SPECIFIED PERCENTAGE-

 

`(A) IN GENERAL- The term `specified percentage' means, with respect to any taxable year beginning in a calendar year, the percentage that the Secretary estimates would result in the aggregate revenue to the Treasury under this section for such taxable year and all prior taxable years to equal the Secretary's estimate of the net cost (if any) to the Federal Government of--

 

`(i) carrying out the Troubled Asset Relief Program established under title 1 of the Emergency Economic Stabilization Act of 2008, and

 

`(ii) the exercise of authority by the Board of Governors of the Federal Reserve System under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343).

 

`(B) DETERMINATION OF PERCENTAGE- Such percentage shall be determined by the Secretary not later than 30 days after the date of the enactment of this section, and redetermined for taxable years beginning in each calendar year thereafter. Such percentage shall take into account the Secretary's most recent estimation of such net cost. Any specified percentage determined under this paragraph which is not a multiple of 1/100th of a percentage point shall be rounded to the nearest 1/100th of a percentage point.

 

`(d) Covered Securities Transaction- The term `covered securities transaction' means--

 

`(1) any transaction to which subsection (b), ©, or (d) of section 31 of the Securities Exchange Act of 1934 applies, and

 

`(2) any transaction subject to the exclusive jurisdiction of the Commodity Futures Trading Commission.

 

`(e) Administration- The Secretary shall carry out this section in consultation with the Securities and Exchange Commission and the Commodity Futures Trading Commission.'.

 

(b) Clerical Amendment- The table of subchapters for chapter 36 of such Code is amended by inserting after the item relating to subchapter B the following new item:

 

`subchapter c. tax on securities transactions'.

 

© Effective Date- The amendments made by this section shall apply to sales occurring more than 30 days after the date of the enactment of this Act.

[brownsfan019 17]

Here's where it can get sticky in futures - what is the .25% going to be based on? Broker margins, exchange margins or what the underlying is actually worth....

 

Imagine a .25% tax in futures that is based on the underlying's actual value, not the margin bond requirements...

 

If this passes, how it is structured could have a killing effect in the futures world. It potentially could equate to (ES for example):

 

$50 x 782.00 = $39,100 x .25% = $97.75

 

And that could be $97.75/side = $195.50/round trip per contract

 

Which means you'd need 4 ES pts just to cover these fees!

 

 

I guess we can hope that if this does pass, some sort of limit or something is placed on the futures b/c there's no way anyone can trade profitably being down 4 pts before a trade has even moved.

 

 

So, anyone got a good FX broker they can recommend? Seems FX was left off the list. :rofl: Good thing OEC is getting into it soon. Might need another option here.

[brownsfan019 17]

Here's some links I found via that 'other' website:

 

 

Contact the brilliant mind behind this: http://www.house.gov/formdefazio/contact.html

 

 

Contacting your congress rep: http://www.visi.com/juan/congress/

 

 

Contact Ways & Means Committee: http://waysandmeans.house.gov/

(Contact in upper right corner of page)

 

 

Track status of this bill: http://www.govtrack.us/congress/bill.xpd?bill=h111-1068

 

 

At the very least, send an email expressing your concern over this ridiculous 'tax on Wall Street' when many normal guys will be hurt by this tax.

[daedalus 10]

I just sent my nasty email... I encourage you all to do the same!

[wjrusnak 10]

I sent a pleading letter to my Republican senator, Arlen Specter. I guess the only thing we can do is plea with them that this act would not punish Wall Street at all. It would punish lower capitol traders like many of us. The more that write, the better.

[Tasuki 10]

Hey folks, I've been mulling this over, and I've realized that this could put many brokerages out of business, especially the futures brokers who rely on high volume from scalpers and short-term daytraders. This includes some of the sponsors of our Traders Laboratory forum.

 

Individually, traders have very little clout, but if we alert our brokerages to the problem, and they get on the phone or send emails and faxes to Washington, our chances improve dramatically.

 

So, bottom line, CALL YOUR BROKER. LET THEM KNOW WHAT'S GOING ON.

[Tasuki 10]

http://www.traderslaboratory.com/forums/f208/transaction-tax-resurfaces-on-a-health-5356.html

 

Here's a link to another thread in TradersLaboratory dealing with the same subject.

 

The other thread is under the heading, "Trading and the Markets."

[Soultrader 12]

Yes, this law will kill the retail trading business and I would be shocked if they actually implemented this. It will drive alot of foreign money out of the US markets due to the lack of liquidity... will only destroy what the US has built so well compared to the rest of the world. Look at some of the Japanese exchanges... very hard to resurrect once dead.

[CuriousGeorge 10]

I found the link shown below on another forum and figured it was worth passing on. Sign your name and have letters sent to your congressmen. If anyone has similar links please share.

 

http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/

[brownsfan019 17]

Hey folks, I've been mulling this over, and I've realized that this could put many brokerages out of business, especially the futures brokers who rely on high volume from scalpers and short-term daytraders. This includes some of the sponsors of our Traders Laboratory forum.

 

Individually, traders have very little clout, but if we alert our brokerages to the problem, and they get on the phone or send emails and faxes to Washington, our chances improve dramatically.

 

So, bottom line, CALL YOUR BROKER. LET THEM KNOW WHAT'S GOING ON.

 

For sure - something like this would kill most any brokerage that caters to those nasty active traders - stocks, options, or futures.

 

I think you'd see brokers out of business, many job losses and much less revenue for the exchanges b/c volume would dry up. All that would be left in the futures biz would be Goldman vs. Morgan Stanley and maybe a few locals. Everyone else won't be able to afford the game anymore...

 

While the genius behind this is marketing it as a way to get Wall Street to payback, it will kill so many other parts of this business that the guy is just not seeing or could care less about.

 

Make sure to send your emails/letters!!! It doesn't take long to send a quick email urging your reps to vote no on this bill. Doesn't matter if you are a big trader or small trader, we all have a voice in this!

 

 

PS

I guess we're seeing real quick that elections do in fact have consequences. While 'CHANGE' was the ticket, exactly what kind of change are we in for???

[darthtrader3.0beta 10]

I just don't buy that our representatives really care what the individual person has to think..Money talks, so if your not giving these guys campaign money you have no voice...

The bright side of that though is we are all against this just as much as the heaviest hitters money wise in the world.

Really though, this has to just be political posturing...I'm sure this guy knows this bill doesn't have a chance in hell of passing. However it makes him look good to the average person next election.

[zdo 20]

I guess we're seeing real quick that elections do in fact have consequences. While 'CHANGE' was the ticket, exactly what kind of change are we in for???

 

From the beginning of the campaign, the proper interpretation of the word "CHANGE" was and is -

radically increased government assistance (...socialism...) which 'necessitates' / leads to radically increased government supervision (don't get me started on the inevitable inefficiencies of that)

radically increased transfer of wealth (which had actually start long ago but now this is the NEW slavery, folks... starting to understand change yet?)

basically the change is to end the republic for which it stands.

 

Denials, reinforced by network commentariat, aside

If you vote for a democrat you are voting for a socialist.

If you vote for a republican you are voting for a democrat

There are only one or two republic-ans left...

[euclid 10]

Here's some links I found via that 'other' website:

 

 

Contact the brilliant mind behind this: http://www.house.gov/formdefazio/contact.html

 

 

Contacting your congress rep: http://www.visi.com/juan/congress/

 

 

Contact Ways & Means Committee: http://waysandmeans.house.gov/

(Contact in upper right corner of page)

 

 

Track status of this bill: http://www.govtrack.us/congress/bill.xpd?bill=h111-1068

 

 

At the very least, send an email expressing your concern over this ridiculous 'tax on Wall Street' when many normal guys will be hurt by this tax.

 

And don't just complain about how it's going to affect you as a speculator. Preventing speculation is one of the stated aims. Make some arguments about how this will be bad for the country including struggling businesses which rely on low cost access to the markets.

 

Point out that without exemptions for market makers, all derivatives exchanges will be forced to move abroad since they rely on arbitrage which would be impossible under this tax regime. With exemptions, then markets could remain, but speculation would be all but eliminated leaving the markets more expensive for investors and businesses. Also the tax lost from speculators forced out of the market would probably outweigh the tax gain.

 

Point out that there isn't a huge pot of money floating around the derivatives markets which can be easily tapped by the government. It's all imaginary money - notional contract values. Counting derivative transactions on their contract value is like counting insurance transactions by their maximum pay-out value. The numbers are absurd. There are no billions of dollars floating around that no-one will miss.

[TraderBG 10]

I've worked so hard to get my trading career off the ground and sacrificed so much. Now that I've finally found my footing and starting to earn a nice living, this hits. If this passes, I'm leaving the country...no doubt about this. I'm not simply going to throw in the towel on something I've invested so much time and money into.

 

My only question is where do I go? Clearly, once this passes another exchange will step up and become the next "financial capital of the world" but which one? Which country is less likely to follow suit? Also, which country will be less of a culture shock for an American like myself? Is the Toronto Stock Exchange worth a look or maybe London? Any ideas?

[brownsfan019 17]

BG - one step at a time brother. There's a chance this won't see the day of light as the rep supporting it does not have a good track record with these bills.

 

With that said, step 1 is to email, call and send letters to your reps in Congress.

 

If it does pass, one question will be if this tax can be applied to US citizens that trade abroad. For example, you can easily trade the Dax or Stoxx if used to trading the ES, if this add'l tax would not apply there.

 

So let's see where this goes before you jump ship, but step 1 is to take action now w/ your reps in Congress!!!

[james_gsx 16]

BG - one step at a time brother. There's a chance this won't see the day of light as the rep supporting it does not have a good track record with these bills.

 

With that said, step 1 is to email, call and send letters to your reps in Congress.

 

If it does pass, one question will be if this tax can be applied to US citizens that trade abroad. For example, you can easily trade the Dax or Stoxx if used to trading the ES, if this add'l tax would not apply there.

 

So let's see where this goes before you jump ship, but step 1 is to take action now w/ your reps in Congress!!!

 

Why don't you write your own Rep who's a cosponsor this bill?

 

http://sutton.house.gov/main/

 

As ridiculous as this bill is, it's just a play to raise support in the future. And I will be utterly shocked if anyones letters get read by an actual member of Congress. Good luck.

 

But you're exactly right, all the money would just move to another exchange. Too many brokerages would be against this, too much money in lobbying to block it. I'm surprised I haven't seen this on T.V yet, since it's simply an attempt for some attention. I would be willing to bet he doesn't represent a very affluent area, so this would be seen as him taking on the "bad guy". Typically those voters are uneducated on the issues at hand, and will vote with what they hear on T.V. etc. So something like their Rep taking on Wall Street and going after the bad guy sounds appealing to them. It's sad, but it works.

Edited February 20, 2009 by james_gsx

[james_gsx 16]

From the beginning of the campaign, the proper interpretation of the word "CHANGE" was and is -

radically increased government assistance (...socialism...) which 'necessitates' / leads to radically increased government supervision (don't get me started on the inevitable inefficiencies of that)

radically increased transfer of wealth (which had actually start long ago but now this is the NEW slavery, folks... starting to understand change yet?)

basically the change is to end the republic for which it stands.

 

Denials, reinforced by network commentariat, aside

If you vote for a democrat you are voting for a socialist.

If you vote for a republican you are voting for a democrat

There are only one or two republic-ans left...

 

...................................

Edited February 20, 2009 by james_gsx

[firewalker 10]

The topic seems pretty hot these days:

 

http://traderfeed.blogspot.com/2009/02/proposed-securities-transaction-tax.html

[TraderBG 10]

BG - one step at a time brother. There's a chance this won't see the day of light as the rep supporting it does not have a good track record with these bills.

 

With that said, step 1 is to email, call and send letters to your reps in Congress.

 

If it does pass, one question will be if this tax can be applied to US citizens that trade abroad. For example, you can easily trade the Dax or Stoxx if used to trading the ES, if this add'l tax would not apply there.

 

So let's see where this goes before you jump ship, but step 1 is to take action now w/ your reps in Congress!!!

 

I believe you are right and that it's very probable to never see the light of day. Then again, the current situation could be the perfect storm for a crazy idea like this. We have a very different kind of president in office with "change" on his mind, a nation extremely receptive to this "change" due to the current financial situation and a Congress full of radicals ready and willing seize this rare opportunity to further their cause.

 

It's in my nature to be ever prepared for whatever obstacles life may throw my way. Step 1 for me is to know my options. The Dax and Stoxx sound like very good alternatives, and certainly worth looking into.

 

I signed a petition and sent off letters to my reps last week. I'm glad to see this is getting more attention on message boards now. I'm not jumping ship yet I'm just getting my lifejacket on just in case.

[TraderBG 10]

This is kind of interesting if you like to read:

 

http://dsp-psd.tpsgc.gc.ca/Collection-R/LoPBdP/BP/bp419-e.htm

[brownsfan019 17]

Why don't you write your own Rep who's a cosponsor this bill?

 

http://sutton.house.gov/main/

 

As ridiculous as this bill is, it's just a play to raise support in the future. And I will be utterly shocked if anyones letters get read by an actual member of Congress. Good luck.

 

But you're exactly right, all the money would just move to another exchange. Too many brokerages would be against this, too much money in lobbying to block it. I'm surprised I haven't seen this on T.V yet, since it's simply an attempt for some attention. I would be willing to bet he doesn't represent a very affluent area, so this would be seen as him taking on the "bad guy". Typically those voters are uneducated on the issues at hand, and will vote with what they hear on T.V. etc. So something like their Rep taking on Wall Street and going after the bad guy sounds appealing to them. It's sad, but it works.

 

Since you asked - I've written every rep in Ohio that I can. Every single one. I've also written the retard behind the bill and the ways and means committee chair.

 

[brownsfan019 17]

As ridiculous as this bill is, it's just a play to raise support in the future. And I will be utterly shocked if anyones letters get read by an actual member of Congress. Good luck.

 

So we should just assume our letters and emails are not read and why bother?

 

 

 

 

If you stop caring and assume no one is listening, then you can't complain if your trade costs go up significantly.

 

Edited February 22, 2009 by DbPhoenix
Personal remarks

[Harlequin 10]

If it does pass, one question will be if this tax can be applied to US citizens that trade abroad. For example, you can easily trade the Dax or Stoxx if used to trading the ES, if this add'l tax would not apply there.

 

I can't see how they could collect tax from abroad apart from asking US citizens to declare and pay it on their tax returns. Basically unenforceable and if that's the case then the exchanges might as well move offshore.

Also interesting to see if they plan to tax non US citizens (like myself) who trade US futures.

[TraderBG 10]

Also interesting to see if they plan to tax non US citizens (like myself) who trade US futures.

 

I would think that if the bill passed, the US markets would be untradable on an intraday basis due to the lack of liquidity.

[brownsfan019 17]

I would think that if the bill passed, the US markets would be untradable on an intraday basis due to the lack of liquidity.

 

No doubt about that.

 

But let's keep the emails, letters and phone calls going! Tell people that know what you do and care about it and get them to email too.

 

This link takes you to an online petition that you fill out, it finds what reps to send it to based on your address and you are done: http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/

 

That is quick, easy and very little time required on the part of the person using it. And the emails are sent (in case wondering if it actually happens) b/c I received system generated replies to my emails saying thanks for writing from the reps.