CPEG DSA Comment on a Financial Transactions Tax

COMMENT ON TAX ON TRADING OF FINANCIAL ASSETS – Chicago Political Economy Group and Democratic Socialists of America 1 Comment on Possible Tax on Trading of Financial Assets Chicago Political Economy Group And Democratic Socialists of America January 28, 2010 COMMENT ON TAX ON TRADING OF FINANCIAL ASSETS – Chicago Political Economy Group and Democratic Socialists of America 2 Introduction Over the years, proposals to tax the trading of financial assets have been suggested by many leading economists. Keynes proposed such a tax on trading of equities, James Tobin on trading in currencies and President Barack Obama’s chief economic advisor, Larry Summers, has advocated such a tax in the past. More recently, Nobel Laureate Paul Krugman has raised the issue. The Chicago Political Economy Group (CPEG) and the Democratic Socialists of America (DSA) strongly endorse the concept of a financial transaction tax (FTT) on the trading of financial assets and urge the IMF and other international bodies to actively work to develop models of an FTT that could be applied by their various member states. I. Scope of a FTT To be effective, a financial transaction tax (FTT) should have the following characteristics. (1) Levied on all three classes of financial assets: equities, currencies and interest rate products; (2) ...