Let’s drain profits from traders, Mark Cuban says

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Dallas Mavericks owner, tech entrepreneur and billionaire Mark Cuban turns out to be another rich guy in favor of higher taxes.

But unlike Oscar Mayer heir Chuck Collins, who wants an immediate rollback of the Bush income tax cuts for high-earners, Cuban wants to go after short-term traders in financial markets.

From his blog:

‘Our government doesn’t know the difference between an investor and a speculator or trader. If we did, we would understand that we should tax the trader/speculator more heavily than the investor.

‘The investor allows entrepreneurs access to capital and allows them to work with it and build businesses, which in turn build employment and do great things for the economy. The trader/speculator pushes companies to make more money now rather than invest in doing the right thing for the company.

‘The trader/speculator dominates the stock market today, which in turn puts pressure on public company CEOs to cut jobs and play games with their financials in order to give the appearance of stability in a far from stable market.

‘The government should raises taxes significantly on profits from short term capital gains on the sale of public stocks, indexes, commodities, futures held for 24 hours or less and extend the length of time required to qualify for long term capital gains and reduce the tax rate on long term gains.

‘This will discourage flash trading, ETFs that move markets purely on cash inflows rather than fundamentals and also reduce the amount of speculation on commodities. It will also reward companies that act in the financial interests of long term holders and their employers. I think the impact on the economy would be far fewer layoffs as CEOs find themselves with more shareholders who think long term rather than short term.’

I would love to find one CEO who would commit to laying off fewer people if only he had more long-term investors in his stock.

Still, Cuban has some good rich-guy company in the tax-the-traders camp: Former IBM Corp. Chief Executive Louis V. Gerstner Jr. has suggested an 80% federal tax rate on day-trader profits and a 60% tax rate on gains on investments held less than six months.

Meanwhile, former Securities and Exchange Commission Chairman Arthur Levitt demands that we stop persecuting high-frequency traders and instead thank them for the liquidity they bring to the stock market.

-- Tom Petruno