Quote from benwm:
Note Wikipedia has added a broader financial transaction tax page, in addition to the Tobin tax page, so we should keep an eye on this one too.
http://en.wikipedia.org/wiki/Financial_transaction_tax
From that same page, here is the summary of the Swedish experiment. Note the final conclusion, which makes perfect sense.
The gaping hole in an FFT proposal is that a tax will put a severe damper on the very activity from which the tax proposes to create income. And further, the taxes that the government receives from trading income will be cut substantially, wiping out any possible gains that might still remain from the FFT tax.
It is completely convoluted logic, which is demonstrated by the Swedish experience.
This is excellent material to be used in postings to news sites that bring up the subject of the FFT.
>> In January, 1984, Sweden introduced a 0.5% tax on the purchase or sale of an equity security. Hence a round trip (purchase and sale) transaction resulted in a 1% tax. In July, 1986, the rate was doubled, and in January, 1989, a considerably lower tax of 0.002% on fixed-income securities was introduced for a security with a maturity of 90 days or less. On a bond with a maturity of five years or more, the tax was 0.003%. Analyst Marion G. Wrobel prepared a paper for Canadian Government in July, 2006, examining the international experience with financial transaction taxes, and paying particular attention to the Swedish experience. [7]
The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kroner per year. They did not amount to more than 80 million Swedish kroner in any year and the average was closer to 50 million.[8] In addition, as taxable trading volumes fell, so did revenues from capital gains taxes, entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kroner by 1988. [9]
