Reply #24: just the rules of the game [View All]

When gambling, you don't pay sales taxes on your gambling chips, and when buying stock, you don't pay sales taxes on your stock. It would be quite silly, really. When you buy a stock, you do not even get a piece of paper in most cases -- well, I don't -- I get online statements from my brokerage and that's the case for most people who don't want to pay outrageous fees. So it isn't like you are receiving any product. A good bit of the time your stock actually turns out to be worth quite a bit less than what you paid. Since we don't have good SEC enforcement, even highly respected Fortune 100 stocks like Enron, WorldCom, United Airlines, etc may turn out to be perfectly worthless even to those who did diligent research and only bought blue chip stocks in major companies. Ford and Disney aren't looking too healthy either at the moment.

Tax people who have inside knowledge and actually end up making a profit on stock but to assess a sales tax on people for being the victims of crime and decades of financial received wisdom seems a bit outrageous to me. If the goal is to make rich people pay their share of taxes, rather than creating a tax to keep new blood out of the market, how about a one-time tax on net worth? Or let's just agree to tax dividends and stock profits at the same rates as any other income? How about that?

If the goal is to shut down the stock markets altogether...well...not sure I agree with that goal. I don't think the idea of speculation is entirely terrible. I just think we need to fund much more aggressive enforcement so that we have a level playing field. Right now, the whole IRA/401(K)/brokerage industry is a way to convince hard-working, conscientious middle class people to fork over their money to rich people because only the top CEOs have the inside information to reliably profit...if we've learned anything from the last few years, I should think we've learned that. (And yet I still hear young people repeat the Motley Fool mantra of DRIP or "buy and hold" and other discredited strategies. Sigh.)