No odds are extremely low when one party dominates the executive and legislative branches. Just look at the healthcare bill and how close it is to becoming reality. You can't underestimate the populist sentiment that drives Washington. They count on you assuming it won't pass. Now is the time to ensure it doesn't.
As to your speculation on whom it would affect I believe your wrong. You are assuming that everything carries on as usual. The moment this tax is debated in committee you'll witness market shockwaves. No rational speculation on the effects of market microstructure will control the market, all self interested parties will fold hands and this will grossly distort the spreads and vol. Furthermore the idea that this targeted at institutions is also wrong. Market makers and mutual funds would be exempt, not that it would save their business. -----Original Message----- From: Nick de Peyster <[email protected]> Date: Tue, 8 Dec 2009 10:47:09 To: <[email protected]> Subject: RE: [amibroker] Traders Tax The odds of this passing strike me as extremely low. So far the government has been extremely supportive of the financial sector ... is there any evidence of a change in the winds? I would think this trader tax might hurt momentum investors rather than traders (especially counter-trend traders). Reason being that the momentum investors tend to count on the counter-trend traders to provide liquidity. Of the two, the countertrend traders have the shorter holding period and smaller gains so the tax will hit them most heavily. So what will happen is that the countetrend traders will become more selective to offset the tax. Pre tax the countetrend trades will become more profitable although after tax it won't make a difference. The momentum investors will take a bath, because there will be fewer countertrend traders on the other side.
