The Push for a Financial Transactions Tax

Financial transaction taxes (FTTs) refers to a group of taxes imposed on taxable financial transactions, such as buying or selling securities or currency, with an objective to discourage excessive speculation. The tax was first initiated in the U.K. as a form of stamp duty on the London Stock Exchange. The tax came to the U.S. in 1936, as a revenue raising mechanism during the Great Depression. During that time, a British economist named John Maynard Keynes, proposed levying a form of this tax on Wall Street transactions, because he believed that the tax would curtail financial traders from continuing to employ excessive speculation and consequently increasing market volatility. Thereafter, James Tobin, an American economist developed the idea of a currency transaction tax, now deemed the “Tobin Tax.” A Tobin Tax is a tax on spot conversions and is intended to place a penalty on short term currency exchange transactions.  This document was created by Tess K. Illos with contributions from Joel G. Oswald, Rebecca L. Konst, Eric I. Robins and David E. Franasiak.

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