The Washington Post Deep Sixes Financial Transactions Taxes

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Wednesday, 21 April 2010 15:50

In an article that discussed an IMF report on new taxes on the financial industry the Washington Post referred to a "financial activities Tax" (FAT) proposed by the IMF and said that: "The IMF's proposed fees would raise more money than the other options under debate, with an emphasis on discouraging the type of risk-taking that caused the recent crisis."

This is not true, a financial transactions tax (FTT), like the ones put forward in recent bills by Iowa Senator Tom Harkin and Oregon Representative Peter DeFazio, could raise more than $100 billion a year. This is considerably more money than the amount that would be raised by the FAT at the levels suggested by the IMF.

Remarkably, this article contains no mention of the FTT even though one of the main purposes of the IMF report was to assess its merits. The IMF unambiguously concluded that an FTT was an administratively feasible tax, directly contradicting one of the main objections put forward by many officials in the Obama administration and other opponents of the tax. Although the IMF report indicated its preference for the FAT, its assessment of the FTT's feasibility undermines one of the main arguments against the tax. This fact should have been noted in the article.