Transactions costs, volume, and revenue estimates from a financial transaction tax
| Financial transaction type | Transaction costs | Volume | FTT rates | Revenue, by elasticity (billion of dollars) | Revenue, by elasticity (% of GDP) | Volume reduction times transaction costs, by elasticity (billions of dollars) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| -0.75 | -1 | -1.25 | -1.5 | -0.75 | -1 | -1.25 | -1.5 | -0.75 | -1 | -1.25 | -1.5 | ||||
| Equities | 0.14% | 45,969 | 0.5% | $74.3 | $51.0 | $35.0 | $24.0 | 0.41% | 0.28% | 0.19% | 0.13% | $44.32 | $50.96 | $55.51 | $58.64 |
| Bonds | 0.08% | 183,639 | 0.5% | $215.4 | $132.8 | $81.9 | $50.5 | 1.20% | 0.74% | 0.46% | 0.28% | $118.87 | $132.83 | $141.44 | $146.75 |
| Options premiums | 0.28% | 22,860 | 0.5% | $53.4 | $41.5 | $32.2 | $25.0 | 0.30% | 0.23% | 0.18% | 0.14% | $34.67 | $41.48 | $46.77 | $50.88 |
| Foreign exchange | 0.01% | 321,196 | 0.05% | $38.9 | $24.3 | $15.1 | $9.4 | 0.22% | 0.14% | 0.08% | 0.05% | $21.66 | $24.27 | $25.90 | $26.91 |
| Futures | 0.001% | 702,225 | 0.05% | $16.9 | $6.1 | $2.2 | $0.8 | 0.09% | 0.03% | 0.01% | 0.00% | $5.95 | $6.14 | $6.21 | $6.24 |
| Swaps | 0.001% | 159,708 | 0.05% | $3.8 | $1.4 | $0.5 | $0.2 | 0.02% | 0.01% | 0.00% | 0.00% | $1.35 | $1.40 | $1.41 | $1.42 |
| Income and payroll tax offsets | $100.7 | $64.3 | $41.7 | $27.5 | 0.56% | 0.36% | 0.23% | 0.15% | |||||||
| Capital gains revenue loss | $64.4 | $41.1 | $26.7 | $17.6 | 0.36% | 0.23% | 0.15% | 0.10% | |||||||
| Increase in federal borrowing costs | $133.1 | $77.4 | $45.3 | $26.6 | 0.74% | 0.43% | 0.25% | 0.15% | |||||||
| Gross total | $402.7 | $257.1 | $167.0 | $109.9 | |||||||||||
| Net total | $104.6 | $74.3 | $53.2 | $38.3 | |||||||||||
Note: Rates in the table are average rates. The precise rates depend on factors such as the average time to maturity of bonds to ensure that prospects for arbitraging tax liability away by shifting among financial assets are minimized.
Source: EPI analysis of Burman et al. (2016), and of data from NYSE Market Data Factbook, NASDAQ Monthly Market Summary, Securities and Financial Markets Association, Bank of International Settlements Derivatives Statistics, and data provided by James Nunns
Financial transactions volumes follow the methodology of Burman et al. (2016a). Equity transactions volumes are from the New York Stock Exchange (NYSE) Market Data Factbook, the Nasdaq Monthly Market Summary, the Securities Industry and Financial Markets Association statistics, and the Bank of International Settlements Derivatives Statistics. Transactions costs were generously provided to us by James Nunn. Revenue offsets were calculated following the methodology of Burman et al. (2016a).
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