Securities Transaction Taxes
An Overview of Costs, Benefits and Unresolved Questions
G. William Schwert
University of Rochester, Rochester, NY 14627
and National Bureau of Economic Research
Paul J. Seguin
Analytic Focus LLC
Financial Analysts Journal, 49 (September/October 1993) 27-35
Reprinted in Securities Transaction Taxes: False Hopes and Unintended Consequences,
Suzanne Hammond, ed., (Chicago: Catalyst Institute, 1995), 1-26
This paper provides an overview of the arguments for and against a Securities
Transaction Tax (STT). Most agree that such a tax will have adverse effects
on the liquidity of the affected markets, and probably on asset values. There
is debate about whether this type of tax on capital is an effective or desirable
method of collecting revenue and controlling price volatility. It would be difficult
to design a tax that did not provide strong incentives to seek alternative trading
methods or markets for tax avoidance. The distortions created by taxation and
avoidance are likely to be large.
Key words: Liquidity, Market Efficiency, Tax Incidence, Distortions,
JEL Classifications: G28
Cited 35 times in the SSCI and SCOPUS through 2014
© Copyright 1993, AIMR
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