Even a small levy could help curb the destructive wheeling and dealing on Wall Street and raise hundreds of billions in revenue.
According to estimates from a 2009 Center for Economic and Policy Research paper, a small tax perhaps ranging from one-half to one-hundredth of a percent, depending upon which financial product is taxed, could reap $350 billion.
This tax offers another significant benefit: It has the potential to curb risky speculative trading that contributes little real economic value. The Capital Institute's John Fullerton has stated that a financial speculation tax could have a significant impact on the high-frequency trading and other "quant" trading strategies that now comprise an astonishing 70% of vastly bloated equity-trading volume.
U.S. Lawmakers to Propose Transaction Tax
Two U.S. lawmakers will introduce measures to impose a transaction tax on financial firms that resembles a proposal released by the European Union.