"Tobin tax"

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The "Tobin tax" is a proposed tax on speculative currency transactions. It was named after the late Nobel Prize-winning economist James Tobin, who suggested the idea in 1971 to reduce volatility and speculation in the foreign-exchange markets. Advocates of the tax see it as a way to discourage excessive risk-taking and share the wealth of big banks.

U.S.

The latest incarnation of the tax in the U.S. was proposed in December 2009 by Sen. Tom Harkin, an Iowa Democrat, and Rep. Peter DeFazio, a Democrat from Oregon.[1]

The Harkin-DeFazio tax would levy a 25-basis-point (0.25%) fee on stock transactions over $100,000 and a two- or three-basis-point charge on derivatives transactions, including futures, options and swaps, including credit-default swaps. Bloomberg News reported the proposed trading tax was supported by more than 200 economists, the AFL-CIO, and business leaders including Warren Buffett and Vanguard founder John Bogle.

U.K.

British regulators have spoken out in support of the tax; however, U.S. Treasury Secretary Timothy Geithner opposed it.[2] [3]

EU

France introduced a financial transaction tax on August 1, 2012. French domiciled chief financial officers now pay 0.2% on any share transaction.[4]

There are 11 European Commission member states – including Germany, Greece, France and Spain, which have adopted a financial transaction tax. The tax is 0.1% on bonds and shares and 0.01% on derivatives.[5]

Also See

Financial Transaction Tax

References

  1. Trading Tax -- a Bad Idea Whose Time Has Come. Barron's.
  2. Leading American economists back campaign for "Tobin Tax". The Guardian.
  3. It's time for a 'Tobin tax' on financial transactions. The Economic Times.
  4. French Financial Transaction Tax Overview. London Stock Exchange.
  5. The Robin Hood tax takes a step closer. The Telegraph.