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Effective Currency Transactions Taxes: The Need to Tax Derivatives

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Publication Date: July 2001

Publisher(s): Center for Economic and Policy Research

Author(s): Dean Baker

Topic: Banking and finance (Financial instruments)

Keywords: Tobin taxes; Trade volume; Foreign exchange

Type: Report

Coverage: United States

Abstract:

This paper shows that any Currency Transactions Taxes (CTT) will be readily evaded by speculators acting in secondary markets, and that trading in secondary markets can easily move the spot market. It argues that to be effective, any CTT will have to be applied to a wide range of financial instruments.