Russell Turpin wrote:
> Your analysis is wrong, though your conclusion is
> right. The transaction tax can't be analyzed in terms
> of income flow, because transactions occur
> independent of that.
It's not analyzed in terms of income flow; rather, the definition of
EQUITABLE-3 considers the relative accumulation of (the basis for,
independent of performance) wealth between two parties making the same
proportional allocation decisions across the buckets: C, I, S. An
equitable system is one where any two parties allocating the same
proportions of their earnings to various tasks will have the same
potential rate of wealth accumulation.
> Consider two investors who
> both put $10,000 into stock. The first buys X
> shares of IBM, and sells them at the end of the
> year. The second buys X shares of IBM, sells them,
> buys Y shares of GE, sells them, buys Z shares of
> RATL and sells them. Let's assume they both
> break even. The first has one full-cycle transaction,
> and pays 2% (as example) on that. The second
> has three full-cycle transactions, and pays 6%.
Well, that's true. But there's still an implicit, loose assumption of
"all things being equal." I don't think it invalidates the analysis.
> The strongest argument against a transaction tax
> in the financial markets is that it would kill day
> trading, hurt the derivatives market, and lessen
I'm not sure the first is a bad thing. The second is bad, and the
last is horrible.
This archive was generated by hypermail 2b29 : Fri Apr 27 2001 - 23:15:17 PDT