Securities Transaction Taxes for U.S. Financial Markets
PERI Working Paper No. 20
46 Pages Posted: 14 Jan 2003
Date Written: 2001
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. - beginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instruments - would generate substantial new government revenues, on the order of $100 billion per year.
JEL Classification: E47, G38
Suggested Citation: Suggested Citation