The interest in new taxable events and the need to regulate financial marketsвЂ™ functioning are two powerful reasons that support the application of this type of tax. Over the last two decades, the European Union (EU) and various European States have proposed or created several taxes aimed at increasing the overall tax burden to which the financial sector is currently subject. When Italy and France imposed FTTs in 2012, both countries raisedВ less than a quarter of expected revenues.ДЄ studyВ of New York StateвЂ™s FTT that was in effect between 19 found that the tax increased the cost of capital, reduced trading and increased market volatility.Financial Transaction Tax in Europe - EC Tax Review View Financial Transaction Tax in Europe by Gabriela Lagos RodrГguez - EC Tax Review Financial Transaction Tax in Europe Gabriela Lagos RodrГguez 30 4 When it was abolished in 1990, investment began to return to Sweden. Not only did this mean the FTT raised little revenue, capital gains tax revenue droppedВ because of a reduction in sales. Even though investors were restricted in moving capital to foreign markets, most trading migrated to London to avoid the tax. In 1984, Sweden imposedВ a financial transaction tax, a proposal that lasted just six years. In fact, some have predictedВ that a financial transactions tax would raise little, if any net revenue because of these negative impacts.ДЄ financial transactions tax has failed in the past In addition, the FTT would often be imposed at the same time as the capital gains tax вЂ“ tax would be paid on the act of selling the asset and also on the gain of the asset.ДЄ financial transactions tax fails to raise the revenue supporters claimД«ecause it would result in less trades and cause capital to flee, this tax would have the flow on effect of reducing income tax and capital gains tax revenue.Д¬ase in point вЂ“ an analysis by the Congressional Budget Office foundВ that imposing a FTT would вЂњdecrease the volume of transactions and would make some types of trading activityвЂќ and вЂњprobably reduce output and employment.вЂќ However, the FTT would be an additional layer of taxation on top of existing capital gains taxes, individual income taxes, and corporate taxes.Д«ecause it is levied on a transaction, this tax could be imposed on the same financial instrument multiple times. Ideal tax policy should be economically neutral by taxing income once (ideally at the point of consumption). In fact, BlackRockВ hasВ previously estimatedВ a financial transaction tax of 0.1 percent would result in an investor losing $2,300 in returns on a $10,000 investment in a global equity fund over ten years.ДЄ financial transactions tax is bad tax policy As a result, returns on pension funds and other savings would be lower because of the increased the costs of buying and selling and the reduction in value of shares.

This tax would also increase market volatility as there would be fewer buyers and sellers and therefore more price jumps.ДЄn FTT would especially impact fund managers that are responsible for 401(k)s, pensions, and index funds and make frequent trades. On a macroeconomic level, this tax would increase the cost of capital and reduce productivity which would in turn harm wages and jobs.

This tax would have broad, negative economic effects. It would restrict economic growth and investment and would fail to raise revenue as supporters claim.ДЄ financial transaction tax would harm investment & economic growth Senator Brian Schatz (D-HI) and Congressman Peter DeFazio (D-Ore.) have introduced legislationВ that would institute a financial transactions tax of 0.1 percent on the sale of any stocks, bonds, and derivates.ДЄ financial transactions tax would be a terrible idea and has failed when it has been tried before.

Financial transaction tax