Securities Transaction Taxes for U.S. Financial Markets
This paper examines the viability of security transaction excise taxes (STETs) as one policy tool for promoting a more stable financial environment, specifically with respect to the U.S. economy. Contrary to a large recent critical literature, we show that a STET can be designed without creating large distortions between segments of the financial market. We also show that a modest STET for the U.S.óbeginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instrumentsówould generate substantial new government revenues, on the order of $100 billion per year.
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