Sunday, August 15, 2010

Financial Speculation Tax

If a small .25% tax was put on the sale of  financial transactions such as stocks, options, credit default swaps, and futures it would increase revenue for the U.S. Federal Government 2.1 trillion over 10 years. About 40 billion a year would be revenue from  stocks and about 170 billion a year would be revenue from  Options, credit default swaps and futures and other similar financial transactions. While this tax would have little effect on long term traders it would be costly to short term ones. Even if the short term traders traded less (thus saving less money) it would still decrease volatility. This tax is also called the Tobin Tax after a Nobel- winning economist James Tobin.


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