![]() ![]() Volume, as expected, it does not show how much of the reduction occurs in speculative Third, although empirical evidence demonstrates clearly that FTTs reduce trading Kingdom), while some are widely acknowledged to have been failures (e.g., Sweden). Second, a wide range of design issues are critical to the formulation of a FTT andĬan help explain why some FTTs are thought to be more successful (e.g., in the United Inconsistent with actual experience with such taxes. Vast amounts of revenue - 1 percent of gross domestic product (GDP) or more - is ![]() On the other hand, the idea that a FTT can raise Including Hong Kong, Switzerland, Singapore, South Africa, and the United Kingdom, Most EU countries have or are planning to adopt FTTs, and many world financial centers, At the very least, the notion that a FTT is unworkable should be rejected. First, the extreme arguments on both sides are Transaction Taxes in Theory and Practice 173 Our review and analysis of previFinancial Potential applications of a FTT in the United States. This paper addresses these issues, with particular attention to the question of the On the retirement savings of middle-class workers and retirees. OpponentsĬlaim that even the progressivity of a FTT is overstated, as much of the tax could fall To financial market failures of the type that precipitated the Great Recession. A FTT does not directly address the factors thatĬause the excess leverage that leads to systemic risk, so it is poorly targeted as a corrective Under plausible circumstances, a FTT couldĪctually increase asset price volatility. To adjust less rapidly to new information. Liquidity, raise the cost of capital, and discourage investment. Speculative trading, it would also curb productive trading, which would reduce market Inputs in the production process, it would cascade, resulting in unequal impacts acrossĪssets and sectors, which would distort economic activity. As a noncreditable tax that falls on intermediate A FTT would boost revenue,īut it would also spur tax avoidance. They claim it would be inefficient and poorly targeted. Opponents counter that a FTT is an “answer in search of a question” (Cochrane, 2013, The FTT - called the “Robin Hood Tax” by some advocates - would primarily fall on the rich, and the revenues could be used toīenefit the poor, finance future financial bailouts, cut other taxes, or reduce public debt. Help recoup the costs of the financial-sector bailout as well as the costs the financialĬrisis imposed on the rest of the country. It would encourage patient capital and longer-term investment. They argue that a FTT would reduce asset price volatility andīubbles, which hurt the economy by creating unnecessary risk and distorting investmentĭecisions. Would reduce the diversion of valuable human capital into pure rent-seeking activities The tax could raise substantial revenueĪt low rates because the base - the value of financial transactions - is enormous.Ī FTT would curb speculative short-term and high-frequency trading, which in turn Proponents advocate the FTT on several grounds. Primary presidential candidate) Bernie Sanders (I-VT). ![]() In the United States, several recent Congressional proposals forįTTs have been introduced, including those put forth by Rep. France adopted a FTT in 2012 that will be integrated with the EU tax ifĪnd when it takes effect. (EU) countries have agreed to enact a coordinated FTT that is scheduled to go intoĮffect in January 2017 (assuming participant countries can work out some significantĭifferences). The FTT is experiencing a resurgence in the developed world. Significant revenue from a small number of relatively sophisticated financial entities. FTTs have long been popular in less developed countries as a way to raise Miniscule securities transfer tax currently funds the Securities and Exchange Commission Stock transaction tax from 1914 to 1965, as did New York State from 1905 to 1981. The British stamp duty wasĮnacted in 1694 and remains in effect today. Taxes on financial transactions have a long history. More recently, leading economists Tobin (1978), Stiglitz (1989), and Summers and Summers ![]() Keynes proposed a FTT in 1936 as a way to discourage the kind of speculation that fueled the stock market bubble that led to the Great Depression. The chorus of FTT advocates includes Bill Gates, Jr., George Soros, and Pope Benedict XVI (Greenhouse and Bowley, 2011). The Great Recession, which was triggered by financial market failures, has prompted renewed calls for a financial transaction tax (FTT) to discourage excessive risk taking and recoup the costs of the crisis. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |