Here's a very short article taken from the pages of an outstanding magazine that I am proud to subscribe to.
Adbusters magazine is a Canadian publication, based in Vancouver BC, that deals with world issues that concern us all.

In 1971 the late Nobel laureate James Tobin proposed enacting an infinitesimal tax on all cross-border currency trades. Though it could be as small as one-tenth of one percent, the tax would generate enormous sums of money due to the sheer volume of trades. A modern variant on the Tobin tax would levy an equally small tax on all market transactions. For the ordinary purchase of stocks and bonds, the cost would be trivial – with no perceptible effect on buyers or sellers. But for the more complex, highly-leveraged derivative transactions – the very ones that sunk our economy – the cost of the tax would add up quickly, helping to dampen speculative excess and temper the wild flows of global capital. It would break the cannibalistic cycle of derivatives feeding off derivatives and money feeding off money. And before long – trade by trade, dollar by dollar – the tax would steer our global system back on course … hard work and entrepreneurial zeal would become valuable commodities again.

French President Nicolas Sarkozy is urging his fellow G20 leaders to introduce a Tobin tax, but his initiative is being largely ignored. Send an email to Barack telling him we need systemic change … tell him to take up Sarkozy’s proposal and start slowing down fast money with a Tobin tax.

– Kalle Lasn

I'm all for it. I question whether or not it would produce the leverage or deterrence sufficient to thwart an economic catastrophe of the nature we've recently experienced, but I don't think it's a bad idea at all.

It kind of reminds me of the whole fraction of a cent on interest that banks throw away. You know the story, somehow a guy diverts those fractions into an account and after a few months has thousands of dollars without any of the bank records or accounts being off. A proliferated urban legend to be sure, they even used the idea on the movie Office Space.

After all, the government is going to get its money one way or another. If they get a huge chunk of change this way, that potentially alleviates possible tax increases for ME down the road.

guess what. the final cost will be multiplied and handed over to consumers as part of the corporate "doing business" model.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

Could be, but there will be taxes paid on the increased revenue as well. Also, if the tax is on currency exchange and not products or services (other than currency exchange of course), then it's not as likely to affect the consumer.

Certainly possible, just not probable.

since this ideal is about large sums of money from large corporate banks I can see how i would affect bank patrons of thes mega banks.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

10c on the $100 exchange is a negligible amount for a consumer. It's the collective amount that can be used to make a difference. Any money changer could eat the .10c on $100 in order to be competitive. Profit vs. risk and overhead in money changing is enormous.

It's also important to remember that the bulk of money changing and the fees associated with it are between bank to bank, not bank to consumer. In such cases, the corporations are not able to pass the cost of the tax on, unless they raise fees or lower interest rates in unrelated areas, and that jeopardizes their competitive abilities.

Although, the idea that a Tobin tax on money changers = higher fees for consumers is a slippery slope fallacy you may very will be right.

Econ 101 - Businesses never pay taxes, whatever tax burden they have is passed along to their customers in every circumstance.

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Calm Chaos Forum...Join Calm Chaos Now

Econ 101 - Businesses never pay taxes, whatever tax burden they have is passed along to their customers in every circumstance.

That's not invariably accurate.

There are three main ways to be competitive in the market; offer a high quality product or service, offer a cheap product or service, and finally, offer a unique product or service.

The only way for business to always pass tax burden onto a consumer is to fix prices amongst competitors (typically illegal). There is always incentive to compete from the price perspective, and many businesses can afford to keep their prices the same instead of raising them in order to compete (especially if the new tax is 1/10 of 1%). The only way to ensure that the tax burden is placed upon the consumer would be through monopoly or illegal price fixing.

Soooo gaming systems price fix. check out the Wii, xbox360 and ps3. No matter where you go its always the same price. also games made for these systems are price fixed. the only gaming system that isn't locked down like this is the PC. Ninetendo itroduced America to game price fixing and its been a stellar success for them and their competitors.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

Soooo gaming systems price fix. check out the Wii, xbox360 and ps3. No matter where you go its always the same price. also games made for these systems are price fixed. the only gaming system that isn't locked down like this is the PC. Ninetendo itroduced America to game price fixing and its been a stellar success for them and their competitors.

That's different. The price fixing with games is done through contract from the distributor to the retail outlets; it's NOT between the competing companies. This is to guarantee that one store cannot cut out another thereby driving the value of games down through competition at the retail level. That's a single company offering to give their product to an outlet only on the contractual basis that they sell it at a particular price.

What I'm referring to is competitors price fixing. I mentioned,

The only way for business to always pass tax burden onto a consumer is to fix prices amongst competitors

So for example, let's say that Sony wanted to sell their PS3 for $1,000. Well, nobody would buy it. But if Sony, Nintendo, and Microsoft all agreed to sell their consoles at $1,000 then you have illegal price fixing. But it's when price fixing is in regard to necessities that it becomes a serious problem for the consumer (i.e. with food, fuel, healthcare, etc). Or if Citgo raised the price of gas to $5.00/gallon. Nobody would buy it. But if Citgo met with Exxon, BP, Texaco, etc and they ALL agree to sell at $5.00 a gallon, then they'd sell gas at that price and that would be illegal.

Here is a good article with examples of competitive price fixing.

Here is something I lifted off some trading site.
Most of the transactions are simply done with computer software monitoring the money markets and as the dollar, the pound or whatever other currencies go up and down the computers shift billions automatically. It's mindless and profitable at the same time...a republican's wet dream.


"The foreign exchange market is unique in many ways, such as in terms of its trading volume and its extreme liquidity. It also has a wide geographical dispersion and long trading hours. This has an average daily turnover of about $ 3.98 trillion. These values make this market closest to ideal perfection. This market is one of the most liquid financial markets in the world. Some of its traders are large banks, central banks, corporations, governments and other financial institutions."


I tend to think that $4 trillion dollars a day should be taxed for each time it moves.

Well, thing about the forex (foreign exchange) market is that it's a zero sum game. It's isn't really profitable in the long run. You have periods of up and down but hardly ever any sustained profit as a bank.

Of course you could play the forex yourself and quit playing once you're up and make money that way, but remaining in the market is not likely to earn a profit. And, because it's a zero sum game, someone has to lose money for another to win money.

What I'd really like to see is a securities transaction tax for brokers or investment firms every time stock is bought or sold. They've already got the transaction fee + the bid/ask spread in their favor. And if they want to raise trading fees because of it, there is always another brokerage that will keep their fees the same and stay competitive.

Sorry for the double post, but wanted to clear something up;

When I was talking about the forex market being a zero sum game, I'm referring specifically to the forex market which is traded for profit on the various exchange rates. The service of changing money by banks where a percentage is charged and money is made on the service of exchange, not playing the various exchange rates, is not a zero sum game and should be taxed.