Why should Ralph Nader get credit for this idea?
By the way, it's not just a cook idea from a crazy liberal.
John Bogle, founder of Vanguard, said this about a financial transaction tax:
"MM: What do you think about a financial transactions tax to slow speculation?
Bogle: I love it. It’s going to be very hard to get, but I love it. The financial institutions that control 75 percent of all stocks are tax free. Pension funds are tax free. Mutual funds are about half tax-deferred, but the other half is run by managers who pay no attention to taxes. So we’ve got these two giant industries basically operating without any frictional costs when they trade stocks back and forth. The tax costs to traders are basically zero, and the commission costs are half a penny a share or something like that. So we’ve taken the frictional costs out and that helps explain why we’ve had this orgy of speculation. No question about that.
So I like the idea of a transaction cost.
I also like the idea of a capital gains tax on very short-term capital gains, applied whether you’re a tax exempt institution or not. In other words, a pension fund would be subject to that tax just like an individual investor.
In 1929, the turnover was about 145 percent in the stock exchange. It was about 25 percent, believe it or not, my first 15 or 20 years in this business. Last year, it was 350 percent. That’s an orgy of speculation we’ve never seen before. If the idea of a transaction cost or a tax on short term capital gains is to cut back on that transaction volume, then it wouldn’t produce much revenue, but it would succeed in its primary goal of reducing those costs.
When you think about it, we have an industry whose raison d’être is to sic one investor on another and say, “You can take advantage of that guy.” That’s what the market is. If you sell, you’re trying to take advantage of the buyer. You think you’re smarter than he is and vice versa. By pitting one investor against another and having that croupier in the middle, which is apparently necessary for the transaction to take place, you ensure that investing is a loser’s game. If investors acted in the community interest, that is, by owning the market, which they own anyway, and not trading, it would be a winner’s game. So by doing what is best for society, our investors would end up being winners rather than losers."
https://www.multinationalmonitor.org/mm2009/052009/interview-bogle.html
Dec 04, 2012 @ 05:35:22
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