December 13, 2011
CBO: Financial Transactions Tax Would Hurt U.S. Economy
Congressional Budget Office, Response to Questions About the Effects of a Tax on Financial Transactions That Would Be Imposed by the Wall Street Trading and Speculators Tax Act (Dec. 12, 2011):
This letter responds to three questions you posed about a tax on financial transactions that would be imposed if the Wall Street Trading and Speculators Tax Act (H.R. 3313 or S. 1787) was enacted:
- What impact would the proposed tax have on gross domestic product (GDP) and on U.S. jobs?
- What impact would the tax have on municipal financing, including the cost to municipalities of funding their activities?
- What effect would the tax have on the depth and liquidity of the global market for U.S. Treasury securities?
Press and blogosphere coverage:
- The Hill, CBO: Transaction Tax Could Hurt U.S. Financial Industry
- Wall Street Journal, CBO: Trading Tax Could Drive Away Financial Firms
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A tax like this would raise what? $150 billion per year? Roughly the cost of our wars. Sure it hurts the financial industry. The industry has grown from about 4% of GDP to 8% of GDP, and not in a healthy way. So this doesn't sound bad.
Wish the letter had discussed more the possibility of foreign competition. My understanding is that our trading partners are waiting on us to pass the tax first. Are they? Also, how much of a threat, if any, would be new exchanges from tax-haven locations?
Posted by: jim harper | Dec 13, 2011 2:16:26 PM
EU proposal projects about half that amount. The UK is the main holdout in the EU. Cameron says they won't agree unless the tax is global. Obama administration proposed a fee on bank liabilities (other than deposits) with much lower revenue and still seems to support that idea over a FTT.
Posted by: Eric Chason | Dec 14, 2011 9:23:29 AM