If you think traders that are seeking to make speculative profits would be 'demolished' paying a 1% tax I guess that's your interest to uphold. Not to make this about me, but just for an example, I pay more than 25% of my income in taxes, a large amount in property taxes and others. Most people pay sales taxes on everything they buy, but if those who's 'work' consists of buying and selling scrips of paper that represent other peoples work, ideas and productive capacity can't afford to pay a scant 1%, I understand. It is a 'free market' we are trying to uphold here. I guess they will pay when they pay that 15% capital gains that they are working so hard to eliminate. What you say? Deferred taxation on earnings? Never heard of it.
That's just it though, it's not a 1% tax. It's a 1% tax on EVERY trade, that's a 2% tax round trip. That means I'd be paying
$2,000 round trip for each standard lot ($100,000) FX trade. Think about that for a second... $2,000. That means I would need a many sigma event of a
200 pip move JUST TO BREAK EVEN.
And that's just ONE trade. I average over 100 trades per month, so that's over $200,000 PER MONTH in taxes. You can't be serious if you think that doesn't totally shut down retail trading.
In order for anyone to actually trade with that kind of tax, we'd have to have little to no leverage. So instead of being able to comfortably trade standard lots with a $50,000 account, traders would need more like $2,500,000, and that tax would still be crippling. That's not money normal people can come up with, so it DOES wipe retail people out of trading, leaving only the mega money (the banks) to trade.
So now you've got a market with ONLY banks trading and any normal Joes actually in the market are buy and holders... who are now being crushed even easier by the banks because the banks are the only ones moving the market.
of the trade. So, if I you had $100,000, make a quick swap into Euros and back in dollars, and end up with $100,001. You would pay a tax of $0.01.