http://tpmcafe.talkingpointsmemo.com/2008/09/16/medicine_for_wall_street_a_fin/The basic point is very simple. We impose a modest transactions tax on all financial transactions, for example a tax of 0.02 percent on the purchase or sale of a future contract or a tax of 0.25 percent on the purchase or sale of a share of stock. (The United Kingdom has had a tax of 0.25 percent on stock sales and purchases for many decades.) Such a tax could easily raise a $150 billion a year, enough to pay for a national health care program or a major clean energy initiative.
A tax of this magnitude will have almost no impact on someone who intends to buy and hold a financial asset. No airline is going to be discouraged from hedging on jet fuel futures because of a 0.02 percent tax, nor will any farmer be dissuaded from hedging on her corn crop.
Similarly, most long-term investors will not even notice the 0.25 percent tax when they buy or sell their stock. The reduction in transactions costs due to the development of computer technology over the last quarter century far exceeds the size of this tax. Most traders will be paying far less for their trades in 2009 with the tax, than they did in 1980 without the tax.
The only people who will really be hit by the tax are speculators; people who buy futures at 2:00, with the intentions of selling at 3:00. Even a modest tax can put a serious dent in the profits of those whose business is short-term speculation. We will therefore see less of this speculation, but it is hard to see why we should care...This is one of the most common sense ideas i've heard- it would encourage investment, and discourage speculation.
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