ECONOMISTS AND FINANCIAL ANALYSTS FOR A U.S. FINANCIAL TRANSACTION TAXOctober 30, 2013

Dear President Obama, Secretary of the Treasury Lew, and Members of Congress,

We write as economists and investment and financial experts because we believe the time has come to establish a financial transaction tax in the United States. The recent agreement by 11 countries in the European Union to move forward toward adoption of such a tax shows that the idea is rapidly gaining major support throughout the world. It deserves its place in a global arsenal of tools for addressing both the need for revenues and the destabilizing influence of short-termism in the financial markets. Indeed, operating financial markets with a financial transaction tax is now the norm across most of the world’s major financial centers, including, London, Hong Kong, South Africa, India, Taiwan, and Switzerland.

The fundamental purpose of financial markets is to provide funds for productive enterprises and address risk. Yet 60 percent of trades are automated, using algo-rithms that can cause flash-crashes and liquidity crunches. A financial transaction tax is an important regulatory tool that should and would have the greatest impact upon the most frequently traded assets. The financial transaction tax will raise the costs of relentless short-term churning that distract the markets from focusing on promoting long-term productive investments.

Studies and historical experience demonstrate that a financial transaction tax set at reasonable tax rates will not discourage productive investments and economic growth even while it will promote a more stable system of financial market trading. Nor would the tax be too costly for traders, as trading volumes will adjust to account for the modest increase in transaction costs. In particular, ordinary investors will be least affected by the tax. Its greatest impact will rather be on high-frequency traders.

With debates in Washington continuing over how to pay for our most important commitments to our citizens, it is clear that we need new taxes that are both fair and that encourage productive investments in our economy. A sales tax for Wall Street trades is, in fact, a common-sense idea whose time has come, and should be included in the mix of proposals to fund the government’s current and future priori-ties, supplying funds for programs that meet human needs. The “Inclusive Prosperity Act,” introduced by Rep. Keith Ellison (D-MN) would raise substantial revenues while taxing transactions at a level designed to reduce speculative activity that threatens to destabilize the markets.

In fact, Rep. Ellison’s version of the financial transaction tax could raise hundreds of billions of dollars annually without imposing hardship on the overall economy. Rather, it will enhance the operation of financial markets by discouraging the type of destabilizing speculation that produced the disastrous Wall Street crash of 2008-09. The financial speculation tax is a rare political and economic win-win, and we urge you to support efforts towards its enactment.

The undersigned:

Alan A. Aja Assistant Professor Brooklyn College-CUNY

Randy Albelda Professor of Economics University of Massachusetts Boston

Gar Alperovitz Lionel R. Bauman Professor of Political Economy University of Maryland, College Park

Marcellus Andrews Professor of Economics Bucknell University

Eileen Appelbaum Senior Economist Center for Economic and Policy Research

Michael Ash Professor of Economics & Public Policy, Chair of Economics, University of Massachusetts-Amherst

Ron Baiman Assist. Professor of Econom-ics, Benedictine University & Chicago Political Economy Group

Dean Baker Co-director, Center for Eco-nomic and Policy Research

Laurence Ball Professor of Economics Johns Hopkins University

Dr. William Barclay Retired Sr. VP, Chicago Stock Exchange; Adjunct Profes-sor, UIC Liautaud Graduate School of Business - Corpo-rate MBA Program; Chicago Political Economy Group

David Barkin Distinguished Professor of Economics, Metropolitan University-Mexico City

Lourdes Benería Professor Emerita Cornell University

Günseli Berik Professor, Economics Department University of Utah

Alexandra Bernasek Professor of Economics Colorado State University

Richard Bilsborrow Professor, Dept of Biosta-tistics, Adjunct in Dept of Economics University of North Carolina

Cyrus Bina Distinguished Research Professor of Economics University of Minnesota (Morris Campus)

Peter Bohmer Faculty in Economics and Political Economy The Evergreen State College

James Bothwell Former Chief Economist; Director, Financial Institu-tions & Markets Issues U.S. General Accounting Office (GAO)

Roger Even Bove Department of Economics & Finance (retired) West Chester University

James K. Boyce Professor of Economics Dept.of Economics & Political Economy Research Institute, University of Massachusetts

Robin Broad Professor, International Development Program School of International Ser-vice, American University

Robert Buchele     Department of Economics    Smith College

Sarah Burke Senior Policy Analyst Friedrich Ebert Foundation

Antonio Callari Sigmund M. and Mary B. Hy-man Professor of Economics Franklin and Marshall College

Martha Campbell Associate Professor, Economics, State University of New York at Potsdam

Jim Campen Economics Faculty, Universi-ty of Massachusetts, Boston

Timothy Canova Professor of Law and Public Finance, Nova Southeastern University

John Chasse Professor Emeritus Econom-ics, State University of New York at Brockport

Howard Chernick Professor of Economics Hunter College, City Univer-sity of New York

Kimberly Christensen, PhD Sarah Lawrence College

Jens Christiansen Professor of Economics Mount Holyoke College

Eugene P. Coyle, PhD Berkeley, CA

James Crotty Professor Emeritus, Universi-ty of Massachusetts Amherst

James M. Cypher Professor of Economics Emeritus California State University

Omar S. Dahi Associate Professor of Eco-nomics, Hampshire College

Anita Dancs Associate Professor of Economics, Western New England University

Jane D’Arista Research Associate Political Economy Research Institute, University of Massachusetts

William Darity Jr Professor of Public Policy Duke University

Susan M. Davis Dept. of Economics and Finance, Buffalo State Col-lege

James G. Devine Professor of Economics Loyola Marymount University

Geert Dhondt Department of Economics The City University of New York

Peter Dorman Evergreen State College

Laura Dresser Associate Director, Center on Wisconsin Strategy University of Wisconsin, Madison

Marie Duggan Professor of Economics Keene State College

Gary Dymski Professor, Department of Economics, University of California, Riverside

Todd Easton Associate Professor University of Portland

Scotty Embree, PhD, MPH Gerald Epstein

Professor of Economics and Co-Director, Political Econo-my Research Institute (PERI) University of Massachusetts, Amherst

Bilge Erten Postdoctoral Research Scholar Columbia University

Susan Feiner Professor of Economics University of Southern Maine

Rudy Fichtenbaum Professor of Economics Wright State University

Sean Flaherty Professor of Economics Franklin and Marshall College

Maria S. Floro Professor, Department of Eco-nomics, American University

Nancy Folbre Professor Emerita, University of Massachusetts-Amherst

Steve Fraser Professor, American Studies and Editor-at-Large, New Labor Forum Columbia University

John Gallup Assistant Professor & Director of Graduate Program Dept. of Economics Portland State University

Barbara Garson Author “Down the Up Escalator”

Teresa Ghilarducci Chair of the Economics De-partment and Director of the Schwartz Center For Econom-ic Policy Analysis, The New School for Social Research

G. Reza Ghorashi Professor of Economics Richard Stockton College of New Jersey

Deborah Goldsmith Instructor, Economics City College of San Francisco

Nance Goldstein, PhD Resident Scholar Brandeis University

Neva Goodwin Co-director, Global Develop-ment And Environment Institute, Tufts University

Stephany Griffith-Jones Professor & Financial Markets Director, Initiative for Policy Dialogue, Columbia University

Robin Hahnel Professor Emeritus, Depart-ment of Economics American University, Washington DC

John B. Hall Professor of Economics and International Studies Portland State University

Martin Hart-Landsberg Professor of Economics Lewis and Clark College

Carol Heim Professor, Department of Economics, University of Mas-sachusetts, Amherst

Peter Hess Doe Professor of Economics Davidson College

Peter Ho Associate Professor in Economics. University of Denver, Colorado

Susan R. Holmberg Director of Research The Roosevelt Institute

Candace Howes Professor of Economics and Chair, Connecticut College

Peter Howes Associate Professor in Eco-nomics, University of Denver, Colorado

Julio Huato Associate Economics Profes-sor, St. Francis College

Sanford Jacoby Professor of Management & Public Affairs, University of California, Los Angeles

Ethan Kaplan Assistant Professor of Economics, University of Maryland, College Park

Emily Kawano Executive Director Center for Popular Economics

Farida C. Khan Professor of Economics & Director, Center for Interna-tional Studies University of Wisconsin-Parkside

Mary C. King Professor, Economics Portland State University

Tim Koechlinm Ph.D. Director, International Studies, Economics, Vassar College

Andrew I. Kohen Professor Emeritus of Economics James Madison University  

Brent Kramer Senior Economist, Fiscal Policy Institute, New York

Peter Karl Kresl Charles P. Vaughan Professor of Economics Emeritus Bucknell University

David Laibman Professor Emeritus, Econom-ics, Brooklyn College, CUNY

Thomas Lambert Assistant Professor of Public Administration and Policy Northern Kentucky University

Frederic S. Lee Professor of Economics University of Missouri- Kansas City

Margaret C. Levenstein Associate Research Scientist, Institute for Social Research; Adjunct Associate Professor of Business Economics Institute for Social Research and Ross School of Business, University of Michigan

Henry M. Levin William Heard Kilpatrick Professor of Economics and Education, Teachers College, Columbia University

Arthur MacEwan Professor Emeritus of Economics, University of Massachusetts, Boston

Allan Macneill Associate Professor Webster University

Zagros Madjd-Sadjadi Professor of Economics & Chair, Department of Eco-nomics and Finance Winston-Salem State University

Jeff Madrick Senior Fellow Roosevelt Institute

Mark H. Maier Professor of Economics Glendale College

Stanley Malinowitz, PhD University of Massachusetts Universidad Nacional de Colombia

Thomas Masterson Levy Economics Institute Bard College

Peter Hans Matthews Professor of Political Econo-my Chair, Dept. of Economics Middlebury College

Kathleen McAfee Associate Professor, Interna-tional Relations, San Francis-co State University

Elaine McCrate Economics and Women’s Studies, University of Vermont

Richard McIntyre Professor of Economics University of Rhode Island

Michael Meeropol Professor and Chair Emeritus, Department of Economics Western New England University

Martin Melkonian Adjunct Associate Professor, Department of Economics Hofstra University

John Miller Professor of Economics Wheaton College

Ida A. Mirzaie Department of Economics Ohio State University

Basilio Monteiro Chair, Division of Mass Communication St. John’s University

Philip Moss Professor of Economics University of Massachusetts Lowell

Tracy Mott Associate Professor & Depart-ment Chair, Dept. of Econom-ics, University of Denver

Michele Naples Department of Economics The College of New Jersey

Julie A. Nelson Professor and Chair, Depart-ment of Economics, Univer-sity of Massachusetts, Boston

Eric Nilsson Professor, Economics Depart-ment, California State Univer-sity San Bernardino

Laurie Nisonoff Professor of Economics Hampshire College

Aaron Pacitti Assistant Professor of Economics, Siena College

Spencer Pack Professor of Economics Connecticut College

Thomas Palley Senior Economic Policy Ad-viser, AFL-CIO and Research Associate, Economic Policy Institute

Richard Parker Professor, Kennedy School of Goverment, Harvard University

James A. Parrott, Ph.D. Fiscal Policy Institute

Tim Payne Economics Shoreline Community College

Dr. William A. Pelz Professor of History & Political Science Elgin Community College

Michael Perelman Professor of Economics California State University

Joseph Persky Professor of Economics University of Illinois at Chicago

Karen Pfeifer Professor Emerita of Econom-ics, Smith College

Robert Pollin Professor of Economics and Co-Director, Political Econo-my Research Institute University of Massachusetts-Amherst

Paddy Quick Professor of Economics St. Francis College, Brooklyn

Michael Reich Director & Professor of Eco-nomics, Institute for Research on Labor and Employment-UC Berkeley

Robert B. Reich Chancellor’s Professor of Public Policy, University of California at Berkeley

Nola Reinhardt Professor of Economics & Director, Global South De-velopment Studies Program, Smith College

Bruce Roberts Professor of Economics University of Southern Maine

John Roche Professor Emeritus St. John Fisher College

Charles P. Rock Professor of Economics Rollins College, Florida

John Sarich Adjunct Associate Professor Cooper Union for the Ad-vancement of Science and Art

Helen Scharber Assistant Professor of Eco-nomics, Hampshire College

Ted Schmidt Associate Professor, Depart-ment of Economics & Finance Buffalo State College

John Schmitt Senior Economist Center for Economic and Policy Research

Juliet Schor Department of Sociology Boston College

Stephanie Seguino Professor of Economics University of Vermont

Anwar Shaikh Professor of Economics New School for Social Research

Nina Shapiro Professor of Economics Saint Peters University

Laurence Shute Professor Emeritus of Eco-nomics, California State Poly-technic University, Pomona

Peter Skott Professor of Economics University of Massachusetts-Amherst

Bryan Snyder Senior Lecturer, Economics Bentley University

Janet Spitz Associate Professor of Busi-ness, The College of Saint Rose

Chace Stiehl Economics Chair Bellevue College

Lynn Stout Professor of Corporate & Business Law Cornell Law School

Frank Stricker Professor of History California State University, Dominguez Hills

Steve Suppan Senior Policy Analyst Institute for Agriculture and Trade Policy

Chris Tilly Professor of Urban Planning and Sociology and Director, Institute for Research on Labor and Employment University of California, Los Angeles

Renee Toback, PhD Labor Economist

Walker F. Todd Legal officer and research officer, Federal Reserve Banks of NY and Cleveland

Mariano Torras Professor of Economics Adelphi University

Wallace C. Turbeville Senior Fellow, Demos

Hendrik Van den Berg Professor of Economics, University of Nebraska— Lincoln

William Van Lear Professor of Economics Belmont Abbey College

Eric Verhoogen Associate Professor , Depart-ment of Economics, Columbia University

Valerie Voorheis Senior Lecturer, Economics University of Massachusetts at Amherst

Paula Voos Professor, Rutgers School of Management and Labor Relations

Norman Waitzman Professor, Dept of Economics University of Utah

Thomas E. Weisskopf Professor Emeritus of Economics, University of Michigan

Ann Willcox Seidman Boston University School of Law, retired

John Willoughby Professor of Economics American University

Edward Wolff Department of Economics New York University

Eiman Zein-Elabdin Professor of Economics Franklin & Marshall College

Robert Zevin Chairman, Zevin Asset Management,LLC.