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    If the point of the stock market is investment and not to function as a crap game or lottery, why not tax quick sales to dampen volatility?
    If you sell stock in less than, say, a week or a month or three months, you pay a 50% or more tax on your profit.
    Would something like this make any sense?

Originally posted to http://drjimlacey.blogspot.com on Thu Oct 30, 2008 at 01:25 PM PDT.

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Comment Preferences

  •  Um, It already is. (4+ / 0-)

    Capital Gains Rates apply to Long Term Capital Gains. (More than one year.)

    Short Term Capital Gains are taxed at ordinary (higher) rates.

    Notice: This Comment © ROGNM

    by ROGNM on Thu Oct 30, 2008 at 01:31:48 PM PDT

  •  Dude, they already have that. (3+ / 0-)
    Recommended by:
    ROGNM, tcdup, coffeetalk

    Short term capital gains are items held less than one year and are taxed at ordinary income rates.

    Next.

  •  Great idea (2+ / 0-)
    Recommended by:
    tcdup, the ghost of bad dad

    I'll write a letter to Woodrow Wilson and suggest it.

    "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

    by Old Left Good Left on Thu Oct 30, 2008 at 01:35:29 PM PDT

  •  there's also the wash sale rule (0+ / 0-)
    Lets say I bought XYZ at 400 before it started to slide. It falls to 350, and I sell it. Then it falls to 300, and I buy it back. The wash sale rule says if I bought it within a month of the sale, my basis is 400, not 300 (I think that's how it works.)

    In a democracy, everyone is a politician. ~ Ehren Watada

    by Lefty Mama on Thu Oct 30, 2008 at 01:48:20 PM PDT

    •  What it says is you can't take the $50/share loss (1+ / 0-)
      Recommended by:
      Lefty Mama

      on the initial sale; you're postponing your final reckoning on the loss until after you sell the second batch of XYZ. This assumes that you bought the same amount both times. Things get lots more complicated if you bought fewer shares the second time, and moderately more complicated if you bought a greater number of shares.

      © sardonyx; all rights reserved

      by sardonyx on Thu Oct 30, 2008 at 02:24:19 PM PDT

      [ Parent ]

  •  Tax proportional with percentage gain (1+ / 0-)
    Recommended by:
    Lefty Mama

    As well as the time-based incentives.  So a gain on a derivative where the "bet" is leveraged, and gains are potentially huge, gets taxed more heavily than a gain on the underlying security.  This would help to dampen the risk, and encourage investment rather than gambling.

    Raising the top marginal rates would also discourage gambling in the market somewhat.

    John McCain: dishonorable liar, national disgrace.

    by Lexpression on Thu Oct 30, 2008 at 02:21:37 PM PDT

  •  The point of a market is to... (1+ / 0-)
    Recommended by:
    Lefty Mama

    have a willing buyer and seller at any point in time. Liquidity = market. Without liquidity, it would be like trying to sell your house (60-180days?) in order to take your profit or get out for whatever reason. Same to get in. What if you had to wait 35days to buy an equity?

    Besides, why do you want to punish some guy who plugged away for 9yrs to develop an intra-day trading algorithm? Doesn't he deserve to profit from his hard work? Just sayin'...

  •  Maybe the diarist meant (1+ / 0-)
    Recommended by:
    Lefty Mama

    tax those who only hold their stocks a few days, like day traders do, more taxes?  

    I wouldn't do it because that is a job for many people and they lose and gain on different days. All they earn yearly should be totaled, then taxed like wages, except for stocks they sell they have held a year or longer.

    I know a woman that day trades.  

    "Democrats can't do any worse than them." O

    by relentless on Thu Oct 30, 2008 at 02:43:24 PM PDT

  •  What is the problem you want to solve? (0+ / 0-)

    Market volatility is caused by a lot of things, many of them having to do with the behavior of crowds.  

    When you have more sellers than buyers, markets fall - when you have more buyers than sellers, they rise.

    As pointed out above "short term" gains are taxed as ordinary income, which encourages people to hold stocks for a year or more to get the long-term capital gains rate.

    A transaction fee, like that imposed on the London and other European exchanges is a good idea to provide a revenue stream to support market regulation and oversight.

    "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." -- Benjamin Franklin

    by Mr Tentacle on Thu Oct 30, 2008 at 02:52:30 PM PDT

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