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Benefits of a Financial Transactions Tax

Working Paper #184

Dean Baker

Paper  127kb pdf

The recent economic turmoil has generated renewed interest in a financial transactions tax (FTT). While such a tax will be vigorously opposed by the financial industry, it offers a very attractive mechanism for raising revenue that is arguably efficiency-enhancing. Calculations based on 2000 trading volumes showed that a set of scaled transactions taxes, imposed on transfers of stock and other financial assets, could raise more than $100 billion a year, even assuming large reductions in trading volume.

This article briefly outlines the case for a financial transactions tax. The first section discusses basic design issues, and the section after that discusses the revenue potential for such a tax. The final section summarizes the potential benefits from financial transactions taxes.


About the Author

Dean Baker
Center for Economic and Policy Research

Publication Information

Type Working Paper
Program Financial Markets Reform
Posted 12/01/08
Download 127kb pdf
# Pages 7