LESLIE: I don’t see any evidence that there would be a negative effect on economic growth. In fact, quite the opposite. I think if you did have a global financial transactions tax where all of the global financial centers were involved and it was also set at a rate that is pretty modest, it wasn’t going to have a distorting negative consequence, then you could raise revenues that would actually help promote growth and invest in job creation. And I think ultimately that’s one of the main arguments in favor of a financial transactions tax.
The United Kingdom already taxes stock, equity, and bond trades at a small rate, but it does not tax derivatives and swaps. Leslie said that the British Labour Party, of which he is a member, is interested in expanding the tax to derivatives and swaps but only if the United States does so as well. Eleven European countries announced plans to institute a financial transactions tax in January.
A plan introduced in Congress by Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) would tax derivatives, stocks, and bond trades at a 0.03 percent rate, raising roughly $350 billion over the next decade. A plan outlined by the Center for American Progress’ Adam Hersh and Jennifer Erickson today would raise $50 billion a year through similarly modest rates. The tax would also add stability to financial markets while promoting investment that is better for growth and the economy, Hersh and Erickson argued.
Such a tax has been supported by business and financial leaders, including a high-frequency trading pioneer who has admitted that such trading, which would be greatly limited by a transactions tax, has “absolutely no social value.”