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Taxing Financial Transactions

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  • Thornton Matheson
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    Abstract

    In reaction to the recent financial crisis, increased attention has recently been given to financial transaction taxes (FTTs) as a means of (1) raising revenue for a variety of possible purposes and/or (2) helping to curb financial market excesses. This paper reviews existing theory and evidence on the efficacy of an FTT in fulfilling those tasks, on its potential impact, and on key issues to be faced in designing taxes of this kind.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/54.

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    Length: 48
    Date of creation: 01 Mar 2011
    Date of revision:
    Handle: RePEc:imf:imfwpa:11/54

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    Keywords: Economic models; Financial assets; Financial sector; Group of Twenty; Revenue measures; Stock markets; Tax rates; Taxation; Taxes; cost of capital; bonds; stock market; futures markets; financial markets; securities transaction; financial services; bond; financial market; stock exchange; capital gains; securities transactions; financial institutions; derivatives markets; corporate bonds; stock price; discount rate; capital inflows; bond issuance; stock transaction; capital levy; asset bubbles; futures contracts; capital gains tax; stock index; capital income; capital markets; spot market; government bonds; stock index futures; capital owners; index futures; bond market; gold futures; securitization; derivatives transactions; corporate bond; financial economics; securities prices; cash flows; derivatives trading; stock option; global stocks; equity derivatives; financial regulation; financial intermediation; futures market; asset valuation; term bonds; hedge funds; financial innovation; long-term bonds; domestic financial markets; corporate loans; capital market; capital contributions; capital inflow; equity market; international finance; equity finance; equity shares; capital controls; bond futures; bond issues; capital formation; stock market transactions; stock values; stock investment; derivative; stock trading; capital stock; swift; stock market trading; public bonds; bond trading; united states ? securities; stock price volatility; risk aversion; brokerage services; financial intermediaries; financial system; stock market transaction; commodity derivatives; insider trading; tax discount; financial market development; financial contracts; commodity futures; financial instruments; equity exposure; securities trading; currency futures; border capital flows; capital flows; private bonds; interest rate futures; spot transactions; global bonds; securities markets; securities market; t-bond; capital increases; buoyant capital inflows; asset securitization; tradable securities; present value; bourse; risk-free interest rate; options on futures; private bond; financial volatility; equity markets; bond principal; hedge; stock issuance; futures prices; options futures; stock market bubble; financial stability; derivative transactions; bond markets; securities regulations; stock trades; capital market equilibrium;

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    Cited by:
    1. Masciandaro, Donato & Passarelli, Francesco, 2013. "Financial systemic risk: Taxation or regulation?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 37(2), pages 587-596.
    2. Lensberg, Terje & Schenk-Hoppé, Klaus Reiner & Ladley, Dan, 2012. "Costs and Benefits of Speculation," Discussion Papers, Department of Business and Management Science, Norwegian School of Economics 2012/12, Department of Business and Management Science, Norwegian School of Economics.
    3. FitzGerald, Valpy, 2013. "The international fiscal implications of global poverty reduction and global public goods provision," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    4. Lendvai, Julia & Raciborski, Rafal & Vogel, Lukas, 2013. "Macroeconomic effects of an equity transaction tax in a general-equilibrium model," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 37(2), pages 466-482.
    5. Dorothea Schäfer, 2012. "Financial Transaction Tax Contributes to More Sustainability in Financial Markets," Discussion Papers of DIW Berlin 1198, DIW Berlin, German Institute for Economic Research.
    6. Lengnick, Matthias & Wohltmann, Hans-Werner, 2010. "Agent-based financial markets and New Keynesian macroeconomics: A synthesis," Economics Working Papers 2010,10, Christian-Albrechts-University of Kiel, Department of Economics.
    7. Luigi, Bernardi, 2011. "Economic crisis and taxation in Europe," MPRA Paper 31007, University Library of Munich, Germany.
    8. John Brondolo, 2011. "Taxing Financial Transactions," IMF Working Papers, International Monetary Fund 11/185, International Monetary Fund.
    9. Jürgen Antony & Michiel Bijlsma & Adam Elbourne & Marcel Lever & Gijsbert Zwart, 2012. "Financial transaction tax: review and assessment," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 202, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Tri Vi Dang & Florian Morath, 2013. "The Taxation of Bilateral Trade with Endogenous Information," Working Papers, Max Planck Institute for Tax Law and Public Finance tax-mpg-rps-2013-07, Max Planck Institute for Tax Law and Public Finance.
    11. Yiannis Kitromilides & Ana Rosa González, 2013. "The EU Financial Transactions Tax: Antecedents and Current Debate," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(3), pages 311-321, May.
    12. Felix Bierbrauer, 2012. "On the incidence of a financial transactions tax in a model with fire sales," Working Paper Series in Economics, University of Cologne, Department of Economics 55, University of Cologne, Department of Economics.

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