Editing Tobin tax (section)

==Comparing Currency Transaction Taxes (CTT) and Financial Transaction Taxes (FTT)==
{{See also|Currency transaction tax|Financial transaction tax}}

===Research evidence===
In 2003, researchers like Aliber et al. proposed that empirical evidence on the observed effects of the already introduced and abolished [[stock]] transaction taxes{{Where|date=July 2011}} and a hypothetical CTT (Tobin) can probably be treated ''interchangeably.''<ref>{{Cite journal|last1=Aliber|first1=R.|last2=Chowdhry|first2=B.|last3=Yan|first3=S.|name-list-style=amp|year=2003|title=Some Evidence that a Tobin Tax on Foreign Exchange Transactions Might Increase Volatility|journal=European Finance Review|volume=7|issue=3|pages=481–510|doi=10.1023/B:EUFI.0000022143.77321.20|doi-access=free}}</ref> They did not find any evidence on the differential effects of introducing or removing, stock transactions taxes or a hypothetical currency (Tobin) tax on any subset of markets or all markets.

Researchers have used models belonging to the [[GARCH]] family<ref>{{Cite journal|last1=Kearney|first1=Colm|last2=Patton|first2=Andrew J.|year=2000|title=Multivariate GARCH Modeling of Exchange Rate Volatility Transmission in the European Monetary System|journal=Financial Review|volume=35|issue=1|pages=29–48|doi=10.1111/j.1540-6288.2000.tb01405.x|issn=1540-6288}}</ref><ref>{{Cite journal|last1=Worthington|first1=Andrew|last2=Higgs|first2=Helen|name-list-style=amp|year=2004|title=Transmission of equity returns and volatility in Asian developed and emerging markets: a multivariate GARCH analysis|url=http://eprints.qut.edu.au/2316/1/2316.pdf|journal=International Journal of Finance and Economics|volume=9|issue=1|pages=71–80|citeseerx=10.1.1.583.4868|doi=10.1002/ijfe.222|hdl=10072/21731 |access-date=2017-11-02|archive-url=https://web.archive.org/web/20170808201628/http://eprints.qut.edu.au/2316/1/2316.pdf|archive-date=2017-08-08|url-status=live}}</ref><ref>{{cite journal|last1=Valadkhani|first1=Abbas|last2=O'Brien|first2=Martin|year=2009|title=Modelling Australian Stock Market Volatility: A Multivariate GARCH Approach|url=https://ideas.repec.org/p/uow/depec1/wp09-11.html|journal=School of Economics, University of Wollongong, Australia, Working Paper|access-date=2015-03-21|archive-url=https://web.archive.org/web/20150402102127/https://ideas.repec.org/p/uow/depec1/wp09-11.html|archive-date=2015-04-02|url-status=live}}</ref> to describe both the volatility behavior of [[stock market]] returns and the volatility behavior of foreign exchange rates. This is used as evidence that the similarity between currencies and stocks in the context of a tax designed to curb volatility such as a CTT (or FTT in general) can be inferred from the almost identical (statistically indistinguishable) behavior of the volatilities of equity and exchange rate returns.

===Practical considerations===
Hanke et al. state, "The economic consequences of introducing a [currency-only] Tobin Tax are [...] completely unknown, as such a tax has not been introduced on any real foreign exchange market so far".<ref name="Hanke">{{cite journal|last1=Hanke|first1=Michael|last2=Huber|first2=JüRgen|last3=Kirchler|first3=Michael|last4=Sutter|first4=Matthias|year=2010|title=The economic consequences of a Tobin tax—An experimental analysis|url=http://eeecon.uibk.ac.at/wopec2/repec/inn/wpaper/2007-18.pdf|journal=Journal of Economic Behavior & Organization|volume=74|issue=1–2|page=58|citeseerx=10.1.1.380.8563|doi=10.1016/j.jebo.2010.02.004|access-date=2017-10-25|archive-url=https://web.archive.org/web/20170809112639/https://eeecon.uibk.ac.at/wopec2/repec/inn/wpaper/2007-18.pdf|archive-date=2017-08-09|url-status=live}}</ref> At the same time, even in the case of stock transaction taxes, where some empirical evidence is available, researchers warn that "it is hazardous to generalize limited evidence when debating important policy issues such as the transaction taxes".<ref name="Umlauf, Steven R. 1993"/><ref name="Liu 2009"/>

According to Stephan Schulmeister, Margit Schratzenstaller, and Oliver Picek (2008), from the practical viewpoint it is no longer possible to introduce a non-currency transactions tax (even if foreign exchange transactions were formally exempt) since the advent of [[Foreign exchange derivative|currency derivatives]] and [[Exchange-traded fund#Currency ETFs or ETCs|currency exchange-traded funds]]. All of these would have to be taxed together under a "non-currency" financial transactions tax (such as under certain proposals in the U.S. in 2009 which, although not intending to tax currencies directly, would still do so due to taxation of currency futures and currency exchange traded funds). Because these three groups of instruments are nearly perfect substitutes, if at least one of these groups were to be exempt, it would likely attract most market volume from the taxed alternatives.<ref name="Schulmeister 6">Schulmeister, p.6</ref>

According to Stephan Schulmeister, Margit Schratzenstaller, and Oliver Picek (2008), restricting the financial transactions tax to foreign exchange only (as envisaged originally by Tobin) would not be desirable.<ref name="Schulmeister 6"/> Any "general FTT seems...more attractive than a specific transaction tax" (such as a currency-only Tobin tax), because it could reduce tax avoidance (i.e., substitution of similar untaxed instruments), could significantly increase the tax base and could be implemented more easily on organized exchanges than in a dealership market like the global foreign exchange market.<ref name="Schulmeister 6"/> (See also [[#Is the tax easy to avoid?|the discussion of tax avoidance as it relates to a currency transaction tax]].)

On October 5, 2009, [[Joseph Stiglitz]] said that any new tax should be levied on all asset classes – not merely foreign exchange, and would be based on the gross value of the assets, thereby helping to discourage the creation of asset bubbles.<ref name="Edmund Conway"/>