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What is a financial transaction tax?
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What is a financial transaction tax?

Aaron Klein
Brookings Institution, 2020
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Editorial Rating

8

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Recommendation

A financial transaction tax (FTT) as a new source of government income is a hot-button issue in the United States. In this focused, accessible overview, economist Aaron Klein explains how an FTT works, who pays it and what its potential revenues might be under different plans. He distills the debates about the ramifications of the tax and provides evidence from other countries of its possible impacts. Wall Street denizens and Main Street investors will find great value in this impartial report on a significant financial proposal.

Take-Aways

  • A financial transaction tax (FTT) is already in place in the United States.
  • An FTT is a progressive tax, and raising it might curtail high frequency trading and rent-seeking activity.
  • The biggest concern about a higher FTT is how the increase would affect US capital markets. 

About the Author

Aaron Klein is a fellow at the Brookings Institution and its policy director on regulation and markets. 

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