Time to tax hot money

| 15/12/2009

(Guardian): There is a growing movement in both the US and around the world for taxing financial speculaiton. The logic is simple: even a very small tax on trades in stocks, options, credit default swaps and other derivative instruments can raise an enormous amount of revenue. Even assuming large reductions in trading volume due to the tax, the country could still raise more than $100bn a year in revenue or more than $1tn over the US’s 10-year budget horizon.

Trading costs have plummeted over the last three decades due to improvements in computer technology. Therefore, modest taxes on financial speculation, such as a 0.25 per cent tax on the purchase or sale of a share of stock, would only raise trading costs back to the level of the 1970s or 1980s.

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