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April 8, 2014

‘Flash Boys’ Fuels More Calls for a Tax on Trading

“It’s not every day that you find a fan club for new taxes, especially among economists and legal experts.

“But a burst of outrage in recent days generated by Michael Lewis’s new book about the adverse consequences of high-frequency trading on Wall Street has revived support in some quarters for a tax on financial transactions, with backers arguing that a tiny surcharge on trades would have many benefits.

“It kills three birds with one stone,” said Lynn A. Stout, a professor at Cornell Law School, who has long followed issues of corporate governance and securities regulation. “From a public policy perspective, it’s a no-brainer.”

“Not only would the tax reduce risk and volatility in the market, Professor Stout said, but it would also raise much-needed revenue for public coffers while making it modestly more expensive to engage in a practice that brings little overall economic benefit.

“Despite these arguments, and support from many economists on the left for what European advocates have called a “Robin Hood tax,” even backers acknowledge the idea faces a struggle to become law, especially in the United States but also more broadly in Europe.”

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Read full NY Times article here.

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