Mar
04

Tough Tax

While imposing a financial transaction tax (FTT) on purchases of stocks, bonds, options and derivatives will reduce trading and may raise revenue — if traders don’t move their business elsewhere which is usually the case — it also increases volatility, exactly the opposite of what is intended. Turns out, where FTTs have been imposed, they discourage trading but that means fewer buyers and sellers and that means prices jump around more.

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