I do not know about you but I don’t have the ability to comprehend the magnitude of these figures. In any event, read all the links.

Gordon Brown’s attempts to cast himself as the architect of financial reform were dealt a humiliating blow on Tuesday after the Governor of the Bank of England rubbished the Prime Minister’s flagship proposal and allied himself with President Barack Obama.

Addressing the influential Treasury Select Committee, Mervyn King dismissed Mr Brown’s plan for a tax on financial transactions, the so-called “Tobin tax”. He said: “I don’t know anyone on the international circuit who’s enthusiastic about it … Of all the measures being considered, the Tobin tax is probably at the bottom of the list.”

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Faced with continuing double-digit unemployment and public unease over his handling of the economy, Mr. Obama is expected to zero in on economic issues during Wednesday’s State of the Union and ahead of November’s midterm congressional elections. The proposals he unveiled Monday will be included in the administration’s fiscal 2011 budget proposal, set for release in a week.

“Joe and I are going to keep on fighting for what matters to middle-class families,” Mr. Obama said at the White House. “None of these steps alone will solve all the challenges facing the middle class… but hopefully some of these steps will reestablish some of the security that’s slipped away in recent years.”

Under its proposal, the White House says all eligible families making under $115,000 a year would see a bigger dependent-care-tax credit. Families could claim up to $3,000 in expenses for one child or $6,000 for two children. Families making less than $80,000 annually could claim a maximum credit of $2,100, up $900 from current law.

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Geithner defended the fee against criticism from some bank officials, who say it is about politics and not economics. Those critics note that some institutions that paid back Troubled Asset Relief Program money ”” or never took any ”” will be taxed along with other banks.

“We’re doing what is fair, and what is just, and what is economically sensible and what we have a legal obligation to do, which is to make sure that we hold the American people harmless from the cost of the financial crisis and that we collect back from the financial industry that benefited from the financial rescue the ultimate costs of what it took to solve this crisis,” Geithner says. “That’s the sensible, fair thing to do.”

Geithner says the program was designed to apply to the largest financial institutions that benefited the most from the rescue.

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IRS Commissioner Douglas Shulman does not file his own taxes in part because he believes the tax code is complex.

During an interview on C-SPAN’s “Newsmakers” program that aired on Sunday, Shulman said he uses a tax preparer for his own returns.

“I’ve used one for years. I find it convenient. I find the tax code complex so I use a preparer,” Shulman said.

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A potential wave of new regulation and higher taxes may be scaring many businesses from hiring, prolonging any rebound in employment, say business groups and economists.

The prospect of increased federal and state regulation and taxes has been particularly disruptive to the hiring plans of small- and medium-sized businesses, which have historically generated about two-thirds of the nation’s jobs.

“I don’t really see the private sector hiring much in the next few months,” says Brian Bethune, an economist at Global Insight. “For the small-business sector there is just too much uncertainty about what happens beyond 2010.”

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The French government is considering levying a tax on the advertising revenues of Google and other internet portals, in the latest sign of a European backlash against the activities of the US internet search group.

President Nicolas Sarkozy instructed his finance ministry to examine the merits of a tax in response to complaints from the French media that Google and other sites are generating advertising income using their news and other content. He also called for an inquiry by French competition authorities into a possible “abuse of dominant position” in the advertising business of big internet sites.

Mr Sarkozy commented after the publication of an independent report for the French culture ministry that proposed a tax on Google, Yahoo, Facebook and other sites, to help fund initiatives for writers, musicians and publishers to make money from the web.

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In the nation’s capital, where $12.1 trillion of national debt looms and Democratic President Barack Obama’s projected 2010 budget shortfall is expected to hit $1.26 trillion, a bill is pending to establish up to $3,500 in annual tax deductions for the family pet.

The legislation is known as the HAPPY Act – Humanity and Pets Partnered Through the Years – and it has some support.

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In reality, this little quarter-percent tax would devastate America’s financial markets and the broader economy. First of all, the “in and out” cost of a transaction is not a quarter-percent: it is a half-percent. Again, this might not seem like much, but consider how difficult is to make even 4% on a safe investment. When one factors in an average inflation rate of 3%, the resulting profit is only 1%, and this is before the effect of state and local taxes.

The sponsors of HR4191 are either so naïve as to have no conception of the operations of modern-day financial markets — and of the competitiveness which makes a single basis point a crucial cost advantage — or, more likely, so callous as not to care. They see an opportunity to curry favor with a poorly informed electorate by trashing Wall Street while at the same time placing within their grasp trillions of dollars of future tax revenues to secure future political advantage.

Unfortunately, those that might be harmed include the patient, long-term investors who invest their funds in IRAs, 401Ks, and other retail investments. These investments are generally low-yielding mutual funds for which trading costs make a crucial difference in long-term return. Barron’s has calculated that the annual cost of a total market index, now 0.07%, would rise to 0.15% under the proposed tax. The loss of 0.08% per year, or a compounded 0.116% per decade, might not seem like much, but when it is imposed every year and compounded over the fifty-year investing lifetime of an average investor, it amounts to a great deal.

And this is the effect even in the case of the lowest-cost index funds.

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Currently, nearly 700,000 people in Florida receive unemployment benefits. For employers such as Kevin Rusk, owner and founder of the Titanic Brewery and Restaurant in Coral Gables, it comes with a cost.

Rusk is one of the thousands of business owners statewide who soon will receive notice that his unemployment insurance premiums are rising ”” in fact, skyrocketing.

The minimum rate for employers with few claims, which was $8, is leaping to more than $100 per employee. That has left business owners like Rusk with sticker shock.

“In my business, if I said I was going to increase the price of a burger,” Rusk says, “I can increase it 5 percent, 10 percent, you know? They increased it 1,200 percent, and that’s just a sour pill for most people to swallow.”

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The U.S. Senate’s health-care overhaul plan would almost double a proposed increase in Medicare payroll taxes for high-earners and impose a new tax on indoor tanning, replacing an earlier levy on plastic surgery.

The new version of the bill announced today by Senate Majority Leader Harry Reid contains a 0.9 percentage-point increase in the Medicare tax for individuals who earn more than $200,000 and couples earning more than $250,000, according to an estimate by the nonpartisan Joint Committee on Taxation. The increase would start in 2013.

That would generate $86.8 billion over six years, up from about $50 billion that would have been generated by an earlier proposed increase of 0.5 percentage point. Those affected would pay a Medicare tax rate of 2.35 percent, while their employers would continue to pay 1.45 percent.

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Thirty-six members of Congress came out against a proposed tax on stock and derivatives trading, warning that it would drive up unemployment and undercut a shaky economic recovery in the U.S.

Charging investors for trading stocks, futures, options and other instruments would also drive up the cost of credit and private investment for both businesses and governments, according to a Dec. 15 letter sent by the 36 members, a copy of which was seen by Dow Jones Newswires.

The letter marks the latest opposition to an early December proposal by Rep. Peter DeFazio, (D., Ore.), who introduced the transaction-tax idea as one way to raise money for job creation and paying down the federal budget deficit.

“In reality, it would be a tax on all investment and savings vehicles because mutual funds and money market fund transactions are, by definition, purchases and sales of securities and bonds,” wrote the members of Congress in the letter.

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Federal regulators initially told Citigroup and other troubled banks that they would be required to hold on to the federal aid for some time as they return to health. But in recent months, the government switched to pushing the companies to repay the money as soon as possible. All nine firms that took federal money last October now have approved plans to pay it back.

This urgency has come despite the lingering concerns of many financial experts about the companies’ health. These analysts said they worry that the firms could face rising losses next year as high unemployment and economic weakness continue to drive great numbers of borrowers into default.

“They are rolling the dice big time,” said Christopher Whalen, a financial analyst with Institutional Risk Analytics. “My fear is that the banks will definitely have to raise a lot more capital next year. The question is from whom and on what terms.”

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Should Congress and the President find enough appeal in HR 4191 to enact it, there are three possible outcomes. The first is that there are enough loopholes that the tax raises little money but has unfortunate side effects like driving jobs and tax revenues overseas or inflating the balance sheets of banks. The second is that there are no meaningful loopholes but, surprisingly, people still trade a lot and enormous taxes are paid, in which case we expect stock prices to fall dramatically. The third, and most likely, is that there aren’t enough exemptions and investors react by sharply reducing trading activity, so there is little revenue but great harm to the market and the economy. Whichever of these occurs, the sponsors of the Bill will face a hard time explaining how, when aiming to shoot the banks, they shot their constituents who will then pay for the next Wall Street bailout.

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A financial transaction tax does not attempt to address the cause of the recent crisis and would be a destabilising action. Not all financial market participants would contribute equally. Different types of investors trade at different frequencies and would therefore be affected differently by the tax. Equity market-makers trade more often than traders of collateralised debt obligations or mortgage derivatives. The latter contributed more to this crisis, yet his proposal would tax the former more.

The liquidity impact from this tax is extremely hard to judge. Liquidity does not respond in a linear fashion and is one of the most difficult aspects of markets to model, although a tax would obviously be very negative. While the illiquid and low trading frequency credit markets (at the heart of the recent trouble) froze last year, the more liquid equity markets had fewer issues clearing and the highly liquid, rapidly trading Group of Seven government bond and forex markets cleared consistently. So the tax would hit the source of the problem the least and directly diminish the liquidity, therefore increasing the risk, in the markets that did continue to function because these markets have a higher average trading turnover.

Read it all from the FT.

A so-called “Tobin Tax” has been pushed by France and the UK, but is less popular in the US.

The leaders called on the IMF to look at a range of options to ensure that banks do not take excessive risks that could lead to another financial crisis.

The call comes in a draft statement expected to be approved later.

“The European Council emphasises the importance of renewing the economic and social contract between financial institutions and the society they serve, and of ensuring that the public benefits in good times and is protected from risk,” the draft statement said.

Speaking at a conference in Brussels, UK Prime Minister Gordon Brown said: “We need a better relationship between the banks and the people they serve.

“There has been a growth in support in recent weeks for this idea and many, many countries are looking at it.”

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Farmers and ranchers use futures contracts as a hedge against price fluctuations, as do elevators that buy and sell grain.

Bethany Shively, spokeswoman for the National Cattlemen’s Beef Association, said such a tax would impact a producer’s effort to stay in business by buying and selling futures.

“Any additional taxes or fees on these instruments would be a tax on ag producers, and that is unacceptable,” Shively said. “This type of proposal would put jobs at risk, not help offset their creation.”

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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.

Moreover, “Wall Street” would not foot the bill for the presumed $150 billion tax. In fact, the tax would simply be added to the cost of doing business, burdening all investors, including 401(k) plans, IRAs and mutual funds.

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Germany’s new development minister said Saturday he opposed taxing financial transactions, putting him at odds with support for such a levy expressed earlier this year by Chancellor Angela Merkel.

“I am speaking out clearly against a tax on financial transactions which would be used to finance development aid,” said Dirk Niebel, a member of the pro-business Free Democrats who took up his post in October.

“It is already a stated position of the liberal party.”

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Treasury Secretary Timothy Geithner said any tax on financial transactions would have to be designed to ensure taxpayers don’t ultimately bear the burden, criteria he said no current plan meets.

“I have not seen the version of that that I think works,” Geithner said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “Otherwise people would have done this a long time ago.”

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Capital Economics has predicted that the worst year of the looming fiscal squeeze will be 2011, when most consumers will feel financially worse off as a result of changes to the tax and spending regimes.

Economists there have calculated that 2.5pc could be knocked off household income growth during 2011, compared with a 0.5pc fall in 2010 and a further 1.5pc reduction in 2012.

“The worst year of the fiscal squeeze looks likely to be 2011. [It] will primarily consist of spending cuts, involving public sector job losses and pay freezes. But taxes will need to rise too, by perhaps £20bn per annum,” said Vicky Redwood of Capital Economics.

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In an interview on the FOX Business Network, Geithner said the U.S. government stands to profit from many of the rescue deals made to big banks a year ago at the height of the financial crisis.

Later in the interview, Geithner told Liz Claman he does not support a tax on stock trades.

On a transaction tax proposal that has been kicked around in Congress as a way to generate much-needed revenue, Geithner said, “I don’t think that specific thing is the way to go.”

Asked about the recent decline in the value of the dollar against other global currencies, Geithner declined to point to a specific value at which point the Treasury Department might grow concerned.

Read it all and the full video of the interview is there.

A “Tobin” style tax on financial transactions is not the best way to raise cash for bank bailouts, a senior official from the European Union’s executive body said on Wednesday.

The G20 group of leading countries asked the International Monetary Fund at a meeting in Scotland last month to come up with options by April for a possible transaction tax, “insurance” levy or resolution fund paid for by banks.

It would help refund taxpayers for huge bailouts and pay for future rescues.

The European Commission, which participates in the G20, told a European Parliament hearing on transaction taxes it was not working on such a proposal, there were doubts about its impact, and several issues need clarifying.

“It leads us to the clear conclusion that such as tax is not the right instrument. It’s not a secure instrument,” said Alexander Wiedow, a director in the commission’s tax unit.

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Three House Democrats are ripping a proposed tax on stock transactions, even as the idea gains traction among Democrats desperate to fund jobs creation….

“Proponents of a transaction tax argue that a small 0.25 percent tax on stocks would be paid for by the highly paid financial traders and would not affect most Americans. This is simply not true. A tax on stock transactions would affect every single person who owns and invests in stocks from small business owners to senior citizens,” the letter said.

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The rise of College Sports Inc. didn’t happen by accident. Administrators at many universities have allowed athletic departments to operate independently, like stand-alone entertainment divisions. They have separate budgets, negotiate their own TV deals and, in some cases, employ hundreds of coaches and staff. And as long as they continue to collect ever-larger sums from ticket sales, boosters and television, who is going to tell them to spend less?

Another key element fueling the arms race is the increasingly indefensible tax treatment of sports revenues. Decades ago ”” before the lucrative television contracts, Internet marketing, Nike sponsorships and luxury boxes ”” Congress essentially exempted colleges from paying taxes on their sports income. The legislators’ reasoning now appears shockingly quaint: that participation in college sports builds character and is an important component of the larger college experience.

Many booster clubs are recognized as charities under the federal tax code. At Florida and Georgia, to name just two universities, the athletic departments are set up as charities.

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Reps. Peter DeFazio, D-Ore., and Ed Perlmutter, D-Colo., are drafting a bill that would slap a 0.25 percent tax on the sale and purchase of financial instruments such as stocks and securities. They estimate it would add about $150 billion a year to the Treasury. They call this crazy idea the “Let Wall Street Pay for the Restoration of Main Street Act of 2009.”

In the Democrats’ world, Wall Street financiers exist in a bubble, where their considerable assets never escape to circulate in the broader economy. In reality, Wall Street props up Main Street every day by allowing investors to back promising ventures and well-run companies — voluntarily.

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For the investor (the person who risks the capital to create real live self-sustaining jobs), every investment, whether it results in a profit or not, would be taxed two more times.

What is near certainty is that this bill will succeed at driving traders to international markets that are escaping the stilted centralized economy that DeFazio and Perlmutter feel the need to champion.

It’s a given that this misguided vengeance against Wall Street is comfort food for populist legislators, but “Wall Street” isn’t stocked exclusively with revolting would-be criminals. It is made up of retirees, small-business owners, entrepreneurs and parents who invest in their kids’ college funds. At last count, nearly 50 percent of Americans are, on some level, invested in the stock market.

If one was a hopeless skeptic, he might believe these legislators were trying to undermine private sector growth by re-appropriating wealth in such a ham-handed way. Even reliable liberal Sen.Chuck Schumer said that a Wall Street transaction tax had the potential to “harm economic recovery efforts by deterring capital investment.”

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Perhaps you heard on the Marketplace Morning report this proposal to tax Wall Street transactions. The revenues would go toward deficit reduction and job creation on Main Street. I understand the motivation behind this, but there’s a pretty good case against it.

Read it all and the comments are interesting as well.

I am aware of several large hedge funds that would move their operations overseas if this measure passed. If I am aware of some, I am sure there are hundreds more.

Think of the implications on traders thinking about stepping into a plunging market to buy. With this transaction tax who would want to step in? It sure won’t be the LTBH clowns because they would already be in.

Right now shorts and short-term traders are the only ones who might step into plunging markets. The former to cover shorts, the latter to take a chance. Both provide much needed liquidity. The traders could count on a stop loss nearby where they can exit if wrong.

If this bill were to pass, there will be no one willing to step into plunging markets. Liquidity would immediately dry up.

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A House bill still being drafted aims to raise $150 billion each year to pay for new jobs.

Under a bill being drafted by Democratic Reps. Peter DeFazio (Ore.) and Ed Perlmutter (Colo.), the sale and purchase of financial instruments such as stocks, options, derivatives and futures would face a 0.25 percent tax.

The bill, a copy of which was obtained by The Hill, is titled the “Let Wall Street Pay for the Restoration of Main Street Act of 2009.”

Read it all. My response to this horrible idea was posted in earlier comments below:

[The reason this is such a bad idea] has to do with behavioral economics. This kind of a tax changes the playing field as a result of which all sorts of people and participants will change their behavior. ALL of these behavioral changes have to be taken into consideration in order to show the overall tax revenue implications of such a proposal.

If you understand the way markets work, and especially what has happened with the technological and information revolutions since the 1980’s, and that an entire culture and its related multiple additional subcultures have arisen all around the markets as individuals have participated in many ways as never before, then you can see that the collateral damage will be MASSIVE. This MASSIVE change will have significant tax implications which almost all advocates do not even think of, much less mention. The question is the OVERALL tax revenue implications of the proposal given all of the subsequent changes it will cause.

The result will be much less corporate revenue, less individual revenue, job loss, small business loss, website and pay site implications, computer, phone and internet implications, and the list gets very long very quickly. All of those additional changes will result in more revenue loss for the government.

This has nothing to do with supply side economics, John, nor with taxes in general or people paying their fair share. What it does have to do with is the obliteration of the democratization of the markets which has come in new ways in the last few decades.