Financial Transactions Taxes Research Articles

Les taxes sur les transactions financières : un outil dépassé ?

Cet article offre un panorama des connaissances actuelles sur les taxes sur les transactions financières (TTF) et discute dans quelle mesure une TTF peut être un instrument efficace pour remplir trois types de fonctions : (1) corriger les imperfections de marché ; (2) redistribuer les ressources de l'économie ; (3) financer la dépense publique de manière efficace. À l'aide de travaux de recherche récents et de quelques nouveaux calculs simples basés sur la TTF française, cette étude conclut qu'une TTF ne semble vraiment remplir aucun de ces trois types d'objectifs. Plutôt que d'appliquer l'idée ancienne d'une TTF, cet article plaide pour considérer des outils plus modernes et plus ciblés pour remplir les mêmes objectifs de manière plus efficace. Classification JEL : G10, G14, G18, H32.

Financial Transactions Taxes: Potential Revenue and Economic Implications

Given Donald Trump’s extreme income tax–cut proposal, even useful tax hikes may not be likely. But down the road, there may be a call for higher taxes again to support social policies and manage, in the minds of Republican sponsors of tax cuts, a bulging deficit. This economist argues that a financial transactions tax can both rein in financial excesses and raise significant revenues. Computing the benefits is not easy, and we present his full analysis, which we think is a significant contribution.

Can a financial transaction tax prevent stock price booms?

We present a stock market model that quantitatively replicates the joint behavior of stock prices, trading volume and investor expectations. Stock prices in the model occasionally display belief-driven boom and bust cycles that delink asset prices from fundamentals and redistribute considerable amounts of wealth from less to more experienced investors. Although gains from trade arise only from subjective belief differences, introducing financial transactions taxes (FTTs) remains undesirable. While FTTs reduce the size and length of boom–bust cycles, they increase the likelihood of such cycles, thereby overall return volatility and wealth redistribution. Contingent FTTs, which are levied only above a certain price threshold, give rise to problems of equilibrium multiplicity and non-existence.

Cleaning the gears: Counter-cyclical asset trading with financial transactions taxes

Abstract This paper analyzes the effect of financial transactions taxes (FTT) and idiosyncratic income risk on counter-cyclical asset trading. The model is in the class of DSGE models with incomplete markets. The paper is able demonstrate the potential welfare loss from the imposition of FTT on agents through two factors: higher coefficient of variation of consumption and higher incidence of constrained credit. The paper is also able to demonstrate the effect of FTTs on the market through three factors: significantly lower trading volume, higher variance in unencumbered markets, higher volume in unencumbered markets.

International Financial Flows and Transactions Taxes: Survey and Options

Tobin has suggested that exchange rate volatility be controlled through a tax on international financial transactions. This analysis shows that the Tobin tax as a pure transaction tax is not viable. The tax would impair financial operations and create international liquidity problems. It is also unlikely to deter speculation. However, a possible alternative would be a two-tier rate structure—consisting of a low-rate transaction tax plus an exchange surcharge. The exchange rate could move freely within a “crawling” exchange rate band, but overshooting the band would trigger a tax on an “externality,” which is the discrepancy between the market exchange rate and the closest margin of the band. The scheme is inspired by the European Monetary System. However, exchange rates would be kept within the target range through a tax, not through interest policy or central bank sterilization and, eventually, the depletion of international reserves.

International Financial Flows and Transactions Taxes: Survey and Options

Tobin has suggested that exchange rate volatility be controlled through a tax on international financial transactions. This analysis shows that the Tobin tax as a pure transaction tax is not viable. The tax would impair financial operations and create international liquidity problems. It is also unlikely to deter speculation. However, a possible alternative would be a two-tier rate structure—consisting of a low-rate transaction tax plus an exchange surcharge. The exchange rate could move freely within a “crawling” exchange rate band, but overshooting the band would trigger a tax on an “externality,” which is the discrepancy between the market exchange rate and the closest margin of the band. The scheme is inspired by the European Monetary System. However, exchange rates would be kept within the target range through a tax, not through interest policy or central bank sterilization and, eventually, the depletion of international reserves.