Financial policy basis for Sanders Financial Transaction Tax:
Last edited Mon Aug 31, 2015, 01:28 AM - Edit history (3)
There have been people and articles questioning whether Bernie Sanders Financial Transaction Tax can actually raise the amount of revenue he is claiming.
This memo from the Political Economy Research Institute University of Massachusetts-Amherst is in regards to a financial transaction tax utilizing the same taxation rates Bernie Sanders is proposing and states that such a tax would create the revenue Bernie is claiming:
Memo to Robin Hood Tax Coalition
Thoughts on Tax Rates and Revenue Potential for Financial Transaction
Tax in U.S. Financial Markets
Robert Pollin and James Heintz
Political Economy Research Institute
University of Massachusetts-Amherst
March 2, 2012
(with references added 6/9/12)
~Snip~
We assume that, due to the
imposition of the FTT at the rates we propose above, trading
volume will fall no more than 50 percent relative to current levels of trading. For purposes of
our calculations, we assume that trading volume does fall by 50 percent in all financial markets.
Revenue Generated
Proposed Tax Rates and Revenue Estimates
We will first state our conclusions, then provide some, though not all, of the underlying
reasoning behind these conclusions.
Proposed Tax Rates
Financial Instrument Proposed Tax Rate
Stocks 50 basis points
Bonds 15 basis points
Derivatives 0.5 basis points
Assumption on Trading Volume
Financial Instrument Revenue Generated
Stocks $62 billion
Bonds $170 billion
Derivatives $120 billion
TOTAL $352 BILLION
Analysis and Evidence to Support Conclusions
Evidence tied to the UK Stock FTT
In our view, the single most reliable piece of evidence for assessing the impact of an FTT
for U.S. financial markets is the existing FTT that operates on stocks in the United Kingdom.
The UK stock FTT is set at 50 basis points. A 50 basis point FTT was also the proposal that was
made for the United States in 1987 by then House Speaker Jim Wright. Wright’s proposal was
supported by then Treasury Secretary Nicholas Brady and then Budget Director Richard
Darman, who were working under Republican President George H.W. Bush.
~Snip~
Full memo:
http://www.peri.umass.edu/fileadmin/pdf/ftt/Pollin--Heintz--Memo_on_FTT_Rates_and_Revenue_Potential_w_references----6-9-12.pdf
Further information about the Political Economy Research Institute University of Massachusetts-Amherst can be found at their website:
http://www.peri.umass.edu/ftt/
Much additional information on the movement to impose a "Robin Hood tax" like the one Bernie is proposing can be found at Robin Hood Tax Campaign website:
http://www.robinhoodtax.org/ This site provides a wealth of information including a list of respected persons and organizations that support such a tax, other efforts world wide, and many other substantive reasons the tax is a beneficial thing that should be supported.
Many other countries have already instituted some form of financial transaction tax and the
European Union is working on imposing a much smaller financial transaction tax that would be in addition to existing ones. (Please note that are differences between existing financial transaction taxes and those that are more thorough and known as Robin Hood taxes.)
I will try and clean this up more in the AM....
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