Pending proposals by US presidential candidates for a US transaction tax would saddle retail investors with a heavy financial burden, effectively wiping out cost savings from years of market efficiency increases.
The idea of a financial-transaction tax has...gotten more notice since presidential candidates Bernie Sanders and Martin O'Malley have been calling for it. Sanders is calling for a 0.5-percent tax on stock trades, a 0.1-percent tax on bond traders and a smaller tax on futures and options trades. The proposed tax will apply to everyone in the trading ecosystem. To calculate this on a per-trade basis, let's take Jun 10, 2015 as an example. On that day, the Nasdaq had an average trade size of 158 shares, valued at $7,434.07. If the tax were in place, each buyer and seller would have been hit with a tax bill of $37.17 for the trade – four times greater than the $8.95 it would actually cost them to make the trade using discount brokerage Charles Schwab.