Mercatus Scholar George H. K. Wang's Paper on Securities Transaction Taxes' Potential Effect on Equity and Futures Markets

The Mercatus Institute, a public policy research center affiliated with George Mason University, released a paper by Dr. George H. K. Wang, Research Professor of Finance in the School of Management at George Mason University, titled "Securities Transaction Taxes and Market Quality of Equity and Futures Markets: Issues and Evidence." The paper examines arguments for and against a securities transaction tax ("STT") and evaluates the pros and cons based on a review of empirical evidence concerning the impact of STTs on equity and futures markets and market efficiency in various countries.

Dr. Wang found that an STT would likely reduce trading volume and increase trading cost, but may not reduce price volatility. Furthermore, he found that the size of potential STT revenue depends on the STT's impact on market activity, and explained that a sizable STT on futures and equity markets would not only fail to generate the expected tax revenue, but also likely hurt the international competitiveness of U.S. equity and futures markets.

Click here to view the paper, "Securities Transaction Taxes and Market Quality of Equity and Futures Markets: Issues and Evidence," by Dr. George H. K. Wang.