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Wrong, gynedd1, Its truly about the absurdity of providing a super low tax rate for equity churn. That is the gist of what I see as insanity. What benefit does churn provide?
Besides what I just said, liquid stock commands higher values than illiquid stocks. Why do you think a major issue of small companies is a controlling interest? Part of it is the ease one can get at their money. The stock price allow companies plenty of advantages including borrowing costs. I would certainly feel more comfortable buying bonds from a company who's issue of debt is only 10% of its capital worth. It can also serve as compensation without draining the company of its liquid assets. Why do you think companies care about their stock price?
Tax it like anything else to raise revenue, but just taxing post IPO stock trading is nonsensical. Its still going to impact the IPO. But hey, tax accountants will love it. The more complexity, the better.
It boils down to post initial offering trades benefit no one beyond the buyer and seller.
But it doesn't just benefit them since it supports the stock price with the benefits to the company I have just described.That is besides the option to issue more stock.
If we were to do that the unemployment rate would drop to around 2%. Why? Because the stock market would go through the roof and investor confidence would be at record levels. Corporations bring their trillions back home and invest it. In the process it would create jobs. This creation of jobs would spur consumer spending and we would have an economic boom. With the increased investing, consumer spending and job creation it would result in more tax revenue. Obviously, less people would be on public assistance and when they are working they would be paying taxes.
If the price cannot be supported w/o absurd amounts of action, it says the long-time stock holders do not trust the corp long-term outlook.
Stock holders can lose their jobs, have health problems, crash their car. Its nice when things go so well. You can argue it all you want, but people are going to know when they buy an IPO its value will be based on what they can get when they sell it.
Recently they tried this same nonsense with housing near here. Some developer wanted to build a house and sell it under "market value". The reason why was that it was denser housing, and he wanted to change the zoning laws. Besides the economic swindle that the value of the property was being transfered from the low density housing around it, the buyer would also suffer the price control because they had no upside. It doesn't work.
If we were to do that the unemployment rate would drop to around 2%. Why? Because the stock market would go through the roof and investor confidence would be at record levels. Corporations bring their trillions back home and invest it. In the process it would create jobs. This creation of jobs would spur consumer spending and we would have an economic boom. With the increased investing, consumer spending and job creation it would result in more tax revenue. Obviously, less people would be on public assistance and when they are working they would be paying taxes.
This is delusional beyond any rational belief.
The part that is left out of the equation when people proffer these grand "tax cut" schemes is the mammoth cut that would have to take place in government spending. With the kind of taxes that are being suggested I'm not sure the federal government could do anything more than pay interest on the national debt. Right there, you'd see the loss of hundreds of thousands of civilian government jobs as well as military jobs.
The next step would be layoffs in the civilian industries that receive government contracts. The aerospace industry would be devastated and you'd have thousands of highly trained engineers looking for work. The work these people do has implications for our national security. We might not be facing a Cold War type threat now, but history has shown that some country always steps into to fill a power vacuum.
I guess we can kiss decent roads and highways good bye. The federal money that goes to maintain our infrastructure would vanish almost overnight. Millions of people in the construction industry--hit hardest by this recession--would find themselves with a pink slip.
There wouldn't be money with a tax cut like that for social security or medicare. So, I guess all the medical facilities that cater to the needs of the elderly would probably have to close--or at least face severe cutbacks. All grocery stores, gas stations, and Walmarts that depend on the elderly for purchases would have to close up or cut way back. More loss of jobs there.
The idea that handing the money back to the people who pay the taxes will compensate for this loss of spending is incorrect. Upper income people pay most taxes in America. Upper income people also have the highest savings rates of any group in this country. A large portion of the money "handed back" will be saved and not spent. Spending on goods and services is what creates jobs in this economy. Do you question that? If that spending is cut than unemployment will increase. Its not rocket science to figure that one out.
Your "cute idea" would take the recession this country is in and make it far worse. Welcome 25% unemployment--and all the social unrest that would bring.
People here who discuss economics here really need to know how our monetary system works. Some of the approaches expose this deplorable ignorance. Lowering taxes does not require a cut in spending. You want to run deficits when the private sector deleverages.
To discuss a simple fiat money system, a country that had no money would still have resources of capital and labor. Yet, without money, they would be idle. So da guberment could pay IOUs for useful public works. This "debt" would be the perfect solution to their liquidity problems. Instead of an IOU from who knows who, its from da guberment. This would become the money supply. Its a debt that you would never want da guberment to pay back because its the money. Yet if too many went into circulation, da guberment would need to tax them back. If industry is standing idle, and prices are depressed, the last thing you want to do is balance the budget. Its complete and utter folly and could only be the desire of a tea party proselyte whose eyes glow, enamored at the sight of his own destruction. Then we have da guberment employee slug on the other side who wants to spend spend spend(his time napping in the office) instead of offering tax relief for the private sector.
Why would such a policies be promoted? Besides the masses whose financial sophistication beats to the sound of dropping pennies in a bottle, da guberment deficits compete with private bank loans in money creation. That is what differs from the system above. We have a hybrid monetary system of public/private money supply. Yet one does compete with the other. It cooks the goose of the financial overlords to run a deficit here. If its depression, they win via bailout. If its by loaning out, they win again. Yet with all the private deleveraging , it can only go down. Balancing the budget is game over.
Who wants to collect low interest rates? All the low interests rates will do is spark carry trade. The money will not flow into the US. They don't want to make loans and collect low interest. Those who can take on loans don't want them. This is Japan all over again with yen carry trade foiling any rise in local prices. But hey, it creates great opportunities on Wall Street.
No it doesn't make sense for da guberment to always run deficits. During inflation they should run surpluses. Yet in this case, to wither away the loan principles that this industry has stolen through manipulation, its the only way. Inflation would be offset by the tax holiday labor could enjoy as well as higher short interest rates preventing private speculation.
No candidate proposes this because its has not been fed to you. You are animals going to the slaughter.You have your choice before you. You may be slaughtered like an elephant, or like a donkey.
More disposable income means more spending in local areas.
More investment means more people taking risk in business.
If demand is for products made overseas then it profits only the rich who hold stock in the overseas corporations making the products. That is why incomes for everyone but the rich are falling
The poiny, gwnedd, which you have not addressed is short-term gains should not be subsidized by other taxpayers, via an artificially low tax rate.
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