A Financial Speculation Tax (FST) would impose a small levy on financial transactions. Even at the very low level that is currently being considered (.05-.5%), it would curb dangerous high-speed trading, which is the most speculative side of international capital flows, while leaving long-term investors, such as 401K and pension funds, largely unaffected. It would also raise tens of billions of dollars a year, with revenues expected to annually exceed 1.0 percent of U.S. GDP. This would more than cover the costs of many government programs and budget items.
There’s even an argument that this tax will improve the efficiency of financial markets. The late economist James Tobin, the originator of the tax, argued that speculative activity causes harmful fluctuations in financial markets.
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