NY Times Columnist Bob Herbert gave wide exposure to an idea that has not received much press – taxing transactions. He publicised the suggestion from economist Dean Baker, who argues it could raise $100 billion and put a slight damper on speculation.  (Ok, I admit, I did write about transaction taxes here at the end of September, but at the time I hadn’t heard of Dean Baker.)

As Herbert summarises: “This would impose a small fee – ranging up to, say, 0.25% – on the sale or transfer of stocks, bonds and other financial assets, including the seemingly endless variety of exotic financial instruments that have been in the news so much lately.”

“But there’s another intriguing element to the proposal. While the fees would be a trivial expense for what the general public tends to think of as ordinary traders — people investing in stocks, bonds or other assets for some reasonable period of time — they would amount to a much heavier lift for speculators, the folks who bring a manic quality to the markets, who treat it like a casino.

Baker says it raises money in a way that comes primarily at the expense of speculation …“The fees would be a considerable expense for someone who is buying futures, or a stock, or any asset at 2 o’clock and then selling it at 3. The more you trade, the more you pay.”

Filed under: Technology