Continued discussion about transactions tax

With a continued emphasis from lawmakers about reducing the federal budget deficit, some economists are suggesting that lawmakers impose a tax on each financial transaction as a way to raise funds and reduce market speculation.

In a column for the MetroWest Daily News, Martin Evans, a former professor at the Rotman School of Management, University of Toronto, says it may be possible to eliminate corporate income taxes and replace them with a stock transaction tax, which would be about 0.005 percent.

A recent estimate of the impact of the tax, Evans relays, suggested it could bring in $350 billion in revenues if trading activity continued at its current pace. However, the movement of many transactions overseas could cut that number in half.

Evans adds such a tax would also encourage long-term investing instead of daily market speculation, which he views as a positive for the economy, but would be a significant negative for day traders.

Several European leaders have already lent their support for a similar plan, called the "Robin Hood" or Tobin Tax, across the Atlantic, including France's Nicolas Sarkozy and Germany's Angela Merkel.

The idea behind the tax, which would create a significant obstacle for day trading companies, was proposed in 1978 by Nobel prize laureate James Tobin. Being taxed for each stock transaction would put a significant strain on traders, making it all the more important they stay on top of their accounting, tax preparation and daily costs.