Securities Transaction Tax: Financial Markets and Revenue Effects [June 12, 2012] [open pdf - 342KB]
"A securities transactions tax (STT) is a tax imposed on the buyer and/or seller of a security at the time a securities transaction occurs. An STT can be applied to all security traders or selectively to only certain types. An STT can be applied across the board to all securities transactions, or only those involving specific types of securities, for example, stocks, options, and futures, but not bonds. While an STT can come in many different forms, there are two justifications commonly offered for imposing a tax of some sort on financial transactions: it would improve financial market operations and/or it would be a significant source of revenue. […] This report analyzes the general effects of an STT on financial markets and its ability to raise revenue. The analysis examines how the tax could impact the important functions of financial markets--the determination of security prices, the spreading of risk, and the allocation of resources. The analysis of the financial markets then turns to examining how the tax may have an impact on security price volatility and the level of security prices."
CRS Report for Congress, R41192