Sin-Tax Wall Street Cyborg Traders

But wealth creation is good!

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primary topic: Deficit (Taxes)
secondary topics: Commerce (Growth), Corporate Taxes, Economy, Jobs


You’ve probably seen the bumper sticker “No Farms, No Food,” recent attacks on Wall Street, while many aspects are certainly valid, might suggests a bumper sticker, “No Risk, No Jobs” which is the same as “No Corporations, No Prosperity.”

Jobs are created from a desire to make a profit, which means you have to risk your hard earned assets to see if you can make a business work. There is a not-so pleasant feeling in your stomach when you step off that edge. And most new businesses fail.

When the market crashed in March 2009, it was day traders, retail investors, and big Wall Street firms that risked their assets that in no small part brought the country back from the brink of a depression. How? Wealth was created. The market went up.

On the other hand the recent free fall in the market [written in October 2011] has probably been caused or greatly magnified by greedy cyborg traders and short sellers exaggerating a market correction.

What’s a cyborg trader? High frequency trading is an algorithm automated and executed by a computer at inhuman speed—hence a cyborg, part human part machine. Regular humans who worked hard, saved, and invested in American companies by buying stocks that are valued on expected future earnings—don’t stand a chance.

Short sellers benefit from the market going down. Short selling plays a good and valuable roll in the stock market. Otherwise tulips would be worth $400 a bulb, and the S&P would more closely resemble a ponzi scheme than a free market. But short selling in excess is simply a way for rich and powerful firms to manipulate the market and steal stocks from hard working folks who panic, all to easily, in an artificially steep market drop, and sell at the bottom.

The solution is a sin tax on cyborg traders and short sellers. For high volume trading a stiff per share and per trade tax, enough to slow the market down to human speed by changing the economics. It would be a good idea to wait until a market top to put this into effect. For short sellers, and put buyers, a more modest but meaningful tax surcharge.

Q: What’s the sin in aggressive short selling?
A: Wealth destruction that has resulted in 20% of the population having nothing gainful to do all day (total unemployment including the disaffected).

Many middle class families have had their 401K drop in value by 25-50%. That affects buying patterns at local businesses that employ (or don’t) our neighbors. No customers, no jobs.

Leveling the playing field by taking some of the profit out of short selling, and significantly limiting cyborg traders only seems the American thing to do. Wealth is good. What’s the alternative?

These sin taxes could go to fund an infrastructure bank to build the bones of a nation second to none. Or just lower the deficit. What do you think?


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