The Potential Revenue From Financial Transactions Taxes
The economic crisis of the last two years has led to serious concerns about the sharp growth in the federal government's fiscal deficit as well as the government's overall debt burden as a share of total U.S. GDP. Many analysts also believe that an excessive share of the economy's resources is being consumed by the financial sector. A financial transactions or trading tax is a policy tool that can address both issues: 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. This paper calculates the revenue potential from a set of financial trading taxes.