Analysis of a Statewide Financial Transactions Tax
May 15, 2015 | Economics and Other
Letter discussing issues that should be considered when evaluating a potential state-level tax on the transfer of securities (May 2015). The office was asked to discuss the viability of the tax and identify any benefits or detriments associated with it.
This letter considers a specific form of FTT, the securities transaction tax, which is applied to trades of equities, debt and their derivatives. Other types of FTTs include: (1) currency transaction taxes, which are applied to foreign exchange transactions; (2) capital levy taxes, which are imposed on increases in business capital; and (3) bank transaction taxes, which are taxes on deposits or withdrawals from bank accounts. For simplicity, all references to the FTT in this analysis are synonymous with a securities transaction tax. Other types of FTTs are not discussed.