Policy Forum: Editor's Introduction-Taxation of the Financial Sector Kevin Milligan ~ Vancouver School of Economics ~ University of British Columbia

Policy Forum: Editor's Introduction-Taxation of the Financial Sector

Canadian Tax Journal, Vol. 64, No. 2, pp. 371-372. (2016)
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Tax policy for the financial sector receives special attention from many analysts. There are several possible motivations for this attention. Some policy analysts want to ensure neutrality for the financial sector, as compared with the taxation of other industries, arguing that undertaxation of the financial sector leads to an inefficient industrial mix. Many others, though, want to go beyond neutrality to tax the financial sector more than other sectors. The motivations range from a corrective, Pigouvian strategy of discouraging putatively "wasteful" speculation, to concern for the fairness of tax burdens, to the desire to gain access to a new revenue source for governments. There are also some analysts who advocate the imposition of a special "benefit tax" to fund the cost of potential future bailouts. Every one of these motivations became much more salient in the wake of the 2008-9 financial crisis, renewing concern about the taxation of the financial sector.


Published version, 2016: link.

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