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The Potential Revenue from Financial Transactions Taxes


  • Dean Baker
  • Robert Pollin
  • Travis McArthur
  • Matt Sherman


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. It updates an earlier set of calculations, using a similar methodology.

Suggested Citation

  • Dean Baker & Robert Pollin & Travis McArthur & Matt Sherman, 2009. "The Potential Revenue from Financial Transactions Taxes," Working Papers wp212, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:periwp:wp212

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    References listed on IDEAS

    1. Chirinko, Robert S. & Wilson, Daniel J., 2008. "State investment tax incentives: A zero-sum game?," Journal of Public Economics, Elsevier, vol. 92(12), pages 2362-2384, December.
    2. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    3. Brian M. Freeman & Allan I. Mendelowitz, 1982. "Program in search of a policy: The chrysler loan guarantee," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 1(4), pages 443-453.
    4. Daniel J. Wilson, 2005. "Beggar thy neighbor? the in-state vs. out-of-state impact of state R&D tax credits," Working Paper Series 2005-08, Federal Reserve Bank of San Francisco.
    5. Chang, Ha-Joon, 1993. "The Political Economy of Industrial Policy in Korea," Cambridge Journal of Economics, Oxford University Press, vol. 17(2), pages 131-157, June.
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    Cited by:

    1. Jeannette Wicks-Lim & Jeffrey Thompson, 2010. "Combining Minimum Wage and Earned Income Tax Credit Policies to Guarantee a Decent Living Standard to All U.S. Workers," Published Studies peri_mw_eitc_oct2010, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. Neil McCulloch & Grazia Pacillo, 2010. "The Tobin Tax A Review of the Evidence," Working Paper Series 1611, Department of Economics, University of Sussex.
    3. Palley, Thomas., 2015. "Escaping stagnation and restoring shared prosperity : a macroeconomic policy framework for job-rich growth," ILO Working Papers 994874713402676, International Labour Organization.
    4. Dean Baker, 2015. "Working Paper: The Upward Redistribution of Income: Are Rents the Story?," CEPR Reports and Issue Briefs 2015-26, Center for Economic and Policy Research (CEPR).
    5. repec:ilo:ilowps:487471 is not listed on IDEAS
    6. Ben Beachy, 2012. "A Financial Crisis Manual Causes, Consequences, and Lessons of the Financial Crisis," GDAE Working Papers 12-06, GDAE, Tufts University.
    7. Leonce Ndikumana, 2014. "International Tax Cooperation and Implications of Globalization," CDP Background Papers 024, United Nations, Department of Economics and Social Affairs.

    More about this item

    JEL classification:

    • G - Financial Economics
    • G1 - Financial Economics - - General Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G2 - Financial Economics - - Financial Institutions and Services
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation


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