Financial Transactions Taxes

Brief

Financial Transactions Taxes

An Overview

Abstract

The massive financial market failures that led to the Great Recession have prompted renewed calls for a financial transaction tax (FTT) to discourage excessive risk taking and recoup the costs of the crisis. A well-designed FTT could raise up to about 0.4 percent of GDP ($75 billion in 2017) in the United States and would be quite progressive. We discuss design options and the effects of an FTT on various aspects of financial sector behavior and its ambiguous effects on economic efficiency.

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