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As we continue to suffer the consequences of the global financial crash, a tax on financial market transactions has been gaining support as a way to reach two important goals simultaneously: raising a substantial amount of revenue, and reducing the size of financial trading in the U.S. economy relative to the economy’s level of productive activity. Over the last decade, PERI has been exploring the mechanics and potential impact of such a tax.


The Revenue Potential of a Financial Transaction Tax for U.S. Financial Markets
Robert Pollin, James Heintz and Thomas Herndon
March 2016
This paper by PERI Co-Director Robert Pollin, Associate Director James Heintz as well as Thomas Herndon, a PERI Research Assistant, estimates the revenue potential of a financial transaction tax (FTT) for U.S. financial markets. It focuses on analyzing the revenue potential of the Inclusive Prosperity Act that was first introduced into Congress in 2012. The authors conclude conservatively that the net revenue potential of this U.S. FTT as being around $300 billion per year, which equals approximately 1.7 percent of current U.S. GDP.  This U.S. FTT should also not produce significant negative effects on productive investment spending by U.S. nonfinancial corporations. 

Memo to Robin Hood Tax Coalition: Thoughts on Tax Rates and Revenue Potential for Financial Transaction Tax in U.S. Financial Markets
Robert Pollin and James Heintz
March 2012
In this informal memo, Robert Pollin and James Heintz recommend appropriate tax rates for a financial transaction tax in the U.S., and offer their best estimate as to what the revenue potential would be from setting an FTT at those rates.

Transaction Costs, Trading Elasticities and the Revenue Potential of Financial Transaction Taxes for the United States
Robert Pollin and James Heintz
December 2011
Pollin and Heintz review recent evidence on trading costs and trading “elasticities” in U.S. financial markets and elsewhere, in order to inform ongoing discussions as to the viability of establishing a financial transaction tax for U.S. financial markets. They examine the specifics of a bill supported by Senator Harkin and Congressman DeFazio, with a proposed FTT rate of 0.03 percent of the value of a trade, but find that it would generate far less revenue than a higher rate, such as the 0.5 percent FTT in place in the U.K.

The Tobin Tax: A review of the Evidence
Neil McCulloch and Grazia Pacillo
May 2011
The authors synthesize the literature about the impact of FTTs (or “Tobin” taxes) on market volatility. They also review the literature on how a Tobin tax might be implemented, the amount of revenue that it might produce, and the likely incidence of the tax. They conclude that a Tobin tax is feasible and could make a significant contribution to revenue without causing major distortions. However, it would be unlikely to reduce market volatility and could even increase it.

The Potential Revenue from Financial Transactions Taxes
Dean Baker, Robert Pollin, Travis McArthur and Matt Sherman
December 2009
The authors update their calculations (from 2002, below) of the potential revenues that could be collected through a financial transaction tax, using a similar methodology.

Securities Transaction Taxes for U.S. Financial Markets
Robert Pollin, Dean Baker and Marc Schaberg
Eastern Economic Journal, Fall 2003
The authors examine the viability of security transaction excise taxes (STET) as a policy tool for promoting a more stable financial environment in the U.S. They show that a STET can be designed without distorting financial markets, and that a modest STET for the U.S.—beginning with a 0.5 percent tax on equity trades and scaled for other financial instruments—would generate substantial new revenues, on the order of $100 billion per year.

Evaluation of a Proposal to Reinstate the New York Stock Transfer Tax
Robert Pollin and James Heintz
Challenge, July/ August 2003
The authors consider a proposal to reinstate the New York stock transfer tax that was phased out between 1979 and 1981. The proposal under consideration would reinstate the tax at half the rate that prevailed at its repeal. The revenues from the tax, around $3.5 billion under current stock market conditions, would be shared equally by the governments of New York City and New York State.

In the Media

"Economist Argues 'Pie in the Sky' Sanders Will, in Fact, 'Make Economy Great Again'"
Common Dreams, March 30, 2016

"How Bernie Sanders' Wall Street Tax Would Work"
NPR's Morning Edition, February 12, 2016

"Sanders would tax Wall Street to pay for college"
Marketplace, February 11, 2016

"A U.S. Financial Transaction Tax: How Wall Street can Pay for Its Mess"
Robert Pollin
May 2012
In this "Economic Prospects" column for New Labor Forum, Pollin describes the mechanics of the tax, its international support, and how to set a rate that can have a real impact on excessive speculation and the nation’s economic health.

"A U.S. Financial Transaction Tax"
Bill Moyers, May 11, 2012 

"4 Ways Government Policy Favors the Rich and Keeps the Rest of Us Poor"
Alternet, September 2, 2011

Robert Pollin and James Angel debate the financial transaction tax at the Carnegie Institution
C-SPAN, July 2011

"Financial Transaction Tax Might Fix Host of Ills"
Bloomberg News, July 15, 2010

"Taxing the Big Casino"
The Nation, May 9, 1994

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