Robert Pollin () (Department of Economics and Political Economy Research Institute (PERI), University of Massachusetts, Amherst) Dean Baker (Center for Economic and Policy Research (CEPR)) Marc Schaberg
Abstract
This paper examines the viability of security transaction excise taxes (STETs) as one policy tool for promoting a more stable financial environment, specifically with respect to the U.S. economy. Contrary to a large recent critical literature, we show that a STET can be designed without creating large distortions between segments of the financial market. We also show that a modest STET for the U.S.—beginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instruments—would generate substantial new government revenues, on the order of $100 billion per year.
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Find related papers by JEL classification: F3 - International Economics - - International Finance G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
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