A lesser evil of a transaction tax

You know where I stand, I hate the very concept of a transaction tax, but if we were to have one, then let me go the "lesser evil" route. Because as it stands, what's been proposed will not work. First the guy who posted about financial markets was spot on. You'll kill what's good about the markets along with bad. Companies need capital, hell the government now needs a stock market because it owns so much stock (as citizens, it would be nice if Uncle Sam made a profit on that stock so it could redeploy that capital to say infrastructure, I'm just saying.). Robert challenged me to come up with an alternative to meet his objections, so I will give it a go.

A Wall Street Transaction Tax

There seems to be momentum on the hill to push for a small transaction tax on stocks. The proposal puts a 0.1% transaction fee on every order by total cost.

Consider this a sales tax, although instead of regressive, this puppy is progressive as well as more biased towards institutional large investors. (Hey flat taxers, by philosophy you should love this one!)

Because it is based on transactions, each time a security is bought and sold, those fees will add up on those who make large trades the most frequently. In other words, such a tax would target large hedge funds and institutions making profits off of slight fluctuations, such as those engaged in high frequency trading and derivatives.