![]() ![]() Bernie Sanders (I-Vt.) has introduced an FTT proposal in the Senate that mirrors Ellison’s House bill. Chris Van Hollen (D-Md.)-a member of the House Democratic leadership-introduced a bill that included a transactions tax. Ellison’s bill would tax the sale of stocks at 0.5 percent, bonds (with maturity over 60 days) at 0.1 percent, and derivatives and other investments at 0.005 percent. Given the twin goals of raising revenue and ensuring that financial transactions actually do provide good value to the economy, the idea of a financial transactions tax (FTT) has recently gained popularity.Ī number of bills have been put forward in Congress to institute an FTT, most recently the Inclusive Prosperity Act introduced by Rep. 1 In addition, given that the key rationales for a large financial sector are risk-management and macroeconomic stability, the crisis inspired questions about whether the financial sector’s decades-long pre-crisis expansion was beneficial for the potential growth and efficiency of the American economy. The financial crisis of 2007–2009 and the ensuing bank bailouts have led to widespread calls to ensure a “fair and substantial contribution” from finance for the damage this sector inflicted. Through generating tax revenues, decreasing the fees Americans pay on their investments, and shrinking unproductive parts of the financial sector, an FTT would help Wall Street work for Main Street. households) for the damage the sector inflicted. economy continues to recover from the 2008 financial crisis and the ensuing Great Recession, an FTT would help ensure the financial sector compensates other sectors of the economy (particularly U.S. This would boost Americans’ incomes through lowering fees on financial services, such as the management of 401(k)s and other accounts. Lower revenues would be the result of the FTT crowding out financial transactions of little value to the U.S. Higher revenues would result in more funds for social insurance programs and much-needed public investments. Regardless of the level of revenues raised, an FTT would be a win-win for the U.S. This is mainly because other estimates’ assumptions about the volume of financial transactions an FTT would crowd out are too high, and because an FTT is likely to redistribute rather than reduce overall incomes. And net revenues (including offsets from reduced income, payroll and capital gains taxes, and increased borrowing costs) would likely be substantially higher than some other recent estimates indicate. Gross revenues from a well-designed FTT would likely range from $110 billion to $403 billion. What this report finds: A well-designed financial transaction tax (FTT)-a small levy placed on the sale of stocks, bonds, derivatives, and other investments-would be an efficient and progressive way to generate tax revenues. ![]()
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