Burton Malkiel: Proponents of a Transactions Tax Misunderstand How Markets Work

“Don’t tax you, don’t tax me, tax that fellow behind the tree.” Those famous words were spoken more than 30 years ago by the late Louisiana Sen. Russel B. Long when Congress was looking for ways to raise revenue. Some members of Congress believe they’ve found the fellow behind the tree: the Wall Street “speculator.”

Burton Malkiel, author of the classic A Random Walk Down Wall Street gives us a very simple, straightforward argument against the trading tax in a Wall Street Journal Op-Ed this morning.  Writing with Vanguard’s George Sauter, Malkiel makes the case that the proposed tax will reduce liquidity, end up costing the average investor rather than Wall Street, make future crises worse, and produce even more inefficiencies.

While I reject the Random Walk and the Efficient Market Hypothesis in general (which I have seen falsified several times), Malkiel makes some really important points here…

Proponents of a transactions tax misunderstand the way markets work. The bubble in home prices in the United States was not caused by the rapid buying and selling of individual family homes. The financial crisis was primarily a liquidity crisis and a credit crunch, and the major problem with collateralized mortgage-backed bonds was that they declined significantly in value and became illiquid. A transactions tax that would have reduced trading and made repurchase agreements more costly, could have made the problem even worse.

The chorus of pragmatic opposition grows.  Are you paying attention, Congress?

Source:

A Transaction Tax Would Hurt All Investors  (WSJ)

Read Also:

More on the Trader Tax from TRB

What's been said:

Discussions found on the web
  1. bitcoin era reviews 2020 commented on Sep 22

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  2. bitcoin evolution review commented on Sep 24

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  3. love doll commented on Sep 25

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  4. Kimber guns in stock commented on Oct 14

    … [Trackback]

    […] Here you will find 93681 additional Info on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  5. online dating commented on Oct 14

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  6. DevOps Consulting Services commented on Nov 02

    … [Trackback]

    […] Read More Information here to that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  7. dumps + pin commented on Nov 20

    … [Trackback]

    […] Here you can find 76244 additional Info to that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  8. tangerine online login commented on Nov 27

    … [Trackback]

    […] Here you can find 59775 additional Information to that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  9. Automated regression testing commented on Nov 28

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  10. 안전공원 commented on Dec 09

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  11. fake watches commented on Dec 17

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  12. Harold Jahn commented on Dec 19

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]

  13. Digital transformation commented on Jan 15

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2009/12/12/burton-malkiel-proponents-of-a-transactions-tax-misunderstand-how-markets-work/ […]