Financial Aid Appeal Letter Analysis
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Special Circumstances in Financial Aid Appeals
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Philanthropy Ways to donate Gift Aid. Get involved ». Pray ». Daily bible readings Prayer Chain Prayer library Prayer diary. Climate justice faith resources Faith resources Join in 75th Anniversary Service resources. Our work ». Research Programmes News and blogs Press and media Ambassadors and supporters. Search and resources. Resources hub page intro. Online resources. Fulltext search. Climate Justice Learning Journey poster Download our new resource charting a course through the academic year to support children and young people to learn and act together. Financial Crime and Abuse Policy English-language version. Prayer Chain. Wrobel's paper highlighted the Swedish experience with financial transaction taxes. In July the rate was doubled. In January , a considerably lower tax of 0.
On a bond with a maturity of five years or more, the tax was 0. The revenues from taxes were disappointing; for example, revenues from the tax on fixed-income securities were initially expected to amount to 1, million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million. On the day that the tax was announced, share prices fell by 2. But there was leakage of information prior to the announcement, which might explain the 5. These declines were in line with the capitalized value of future tax payments resulting from expected trades. It was further felt that the taxes on fixed-income securities only served to increase the cost of government borrowing, providing another argument against the tax.
Even though the tax on fixed-income securities was much lower than that on equities, the impact on market trading was much more dramatic. On 15 April , the tax on fixed-income securities was abolished. In January the rates on the remaining taxes were cut in half and by the end of the year they were abolished completely. Once the taxes were eliminated, trading volumes returned and grew substantially in the s and s. The Swedish experience of a transaction tax was with purchase or sale of equity securities, fixed income securities and derivatives.
In global international currency trading, however, the situation could, some argue, look quite different. Wrobel's studies do not address the global economy as a whole, as James Tobin did when he spoke of "the nineties' crises in Mexico, South East Asia and Russia,"   which included the economic crisis in Mexico , the Asian Financial Crisis , and the Russian financial crisis. Changes were made in The changes in Stamp Duty rates in , , and provided researchers with "natural experiments", allowing them to measure the impact of transaction taxes on market volume, volatility, returns, and valuations of UK companies listed on the London Stock Exchange.
It simplified the two-tier tax in favour of a mechanism designed solely as a means for raising development revenue. To investigate the feasibility of such a tax they hired the City of London firm Intelligence Capital, who found that a tax on the pound sterling wherever it was traded in the world, as opposed to a tax on all currencies traded in the UK, was indeed feasible and could be unilaterally implemented by the UK government. The Sterling Stamp Duty, as it became known, was to be set at a rate times lower than Tobin had envisaged in , which "pro Tobin tax" supporters claim wouldn't have affected currency markets and could still raise large sums of money. Oxford University Press.
ISBN In late , a Tobin tax amendment was adopted by the French National Assembly. However, it was overturned by March by the French Senate. However, the proposal was rejected by the European Commission. On June 29, , the European Commission called for Tobin-style taxes on the EU's financial sector to generate direct revenue starting from At the same time it suggested to reduce existing levies coming from the 27 member states. The first nation in the G20 group to formally accept the Tobin tax was Canada. In September , French president Nicolas Sarkozy brought up the issue of a Tobin tax once again, suggesting it be adopted by the G On November 7, , prime minister Gordon Brown said that G should consider a tax on speculation, although did not specify that it should be on currency trading alone.
The BBC reported that there was a negative response to the plan among the G For supporters of a Tobin tax, there is a wide range of opinion on who should administer a global Tobin tax and what the revenue should be used for. There are some who think that it should take the form of an insurance: In early November , at the G20 finance ministers summit in Scotland, the British Prime Minister " Mr. Brown and Nicolas Sarkozy , France's president, suggested that revenues from the Tobin tax could be devoted to the world's fight against climate change, especially in developing countries. They suggested that funding could come from "a global financial transactions tax.
John Dillon contends that it is not necessary to have unanimous agreement on the feasibility of an international FTT before moving forward. He proposes that it could be introduced gradually, beginning probably in Europe where support is strongest. The first stage might involve a levy on financial instruments within a few countries. On June 28, , the European Union's executive said it will study whether the European Union should go alone in imposing a tax on financial transactions after G20 leaders failed to agree on the issue. The financial transaction tax would be separate from a bank levy , or a resolution levy, which some governments are also proposing to impose on banks to insure them against the costs of any future bailouts.
EU leaders instructed their finance ministers, in May, , to work out by the end of October , details for the banking levy, but any financial transaction tax remains much more controversial. According to Stephen Spratt, "the revenues raised could be used for They include reducing extreme poverty , reducing child mortality rates, fighting disease epidemics such as AIDS , and developing a global partnership for development. At the UN September World Conference against Racism , when the issue of compensation for colonialism and slavery arose in the agenda , Fidel Castro , the President of Cuba , advocated the Tobin Tax to address that issue. According to Cliff Kincaid, Castro advocated it "specifically in order to generate U. Castro cited Holocaust reparations as a previously established precedent for the concept of reparations.
Tobin's more specific concept of a " currency transaction tax " from lay dormant for more than 20 years but was revived by the advent of the Asian Financial Crisis. In December, Ignacio Ramonet , editor of Le Monde Diplomatique , renewed the debate around the Tobin tax with an editorial titled "Disarming the markets". The tax then became an issue of the global justice movement or alter-globalization movement and a matter of discussion not only in academic institutions but even in streets and in parliaments in the UK, France, and around the world.
In an interview  given to the Italian independent radio network Radio Popolare in July James Tobin distanced himself from the global justice movement. My proposal was made into a sort of milestone for an antiglobalization program ». James Tobin's interview with Radio Popolare was quoted by the Italian foreign minister at the time, former director-general of the World Trade Organization Renato Ruggiero , during a Parliamentary debate on the eve of the G8 summit in Genoa. Afterwards James Tobin distanced himself from the global justice movement. Tobin observed that, while his original proposal had only the goal of "putting a brake on the foreign exchange trafficking", the antiglobalization movement had stressed "the income from the taxes with which they want to finance their projects to improve the world".
He declared himself not contrary to this use of the tax's income, but stressed that it was not the important aspect of the tax. ATTAC and other organizations have recognized that while they still consider Tobin's original aim as paramount, they think the tax could produce funds for development needs in the South such as the Millennium Development Goals ,  and allow governments, and therefore citizens, to reclaim part of the democratic space conceded to the financial markets. In those same "years" that Buiter spoke of, the Tobin tax was also "adopted" or supported in varying degrees by the people who were not, as he put it, "enemies of trade liberalisation.
In , Tobin examined the global monetary system that remained after the Bretton Woods monetary system was abandoned. This examination was subsequently revisited by other analysts, such as Ellen Frank, who, in wrote: "If by globalization we mean the determined efforts of international businesses to build markets and production networks that are truly global in scope, then the current monetary system is in many ways an endless headache whose costs are rapidly outstripping its benefits. Frank then corroborates Tobin's comments on the problems this instability can create e.
They offer to dollarize or euroize , only to find themselves so short of dollars that they are forced to cut off growth. They raise interest rates to extraordinary levels to protect investors against currency losses, only to topple their economies and the source of investor profits. IMF bailouts provide a brief respite for international investors but they are, even from the perspective of the wealthy, a short-term solution at best One of the main economic hypotheses raised in favor of financial transaction taxes is that such taxes reduce return volatility , leading to an increase of long-term investor utility or more predictable levels of exchange rates. The impact of such a tax on volatility is of particular concern because the main justification given for this tax by Tobin was to improve the autonomy of macroeconomic policy by curbing international currency speculation and its destabilizing effect on national exchange rates.
Most studies of the likely impact of the Tobin tax on financial markets volatility have been theoretical —researches conducted laboratory simulations or constructed economic models. Some of these theoretical studies have concluded that a transaction tax could reduce volatility by crowding out speculators  or eliminating individual ' noise traders'  but that it 'would not have any impact on volatility in case of sufficiently deep global markets such as those in major currency pairs,  unlike in case of less liquid markets, such as those in stocks and especially options, where volatility would probably increase with reduced volumes.
In contrast, some papers find a positive effect of a transaction tax on market volatility. In most of the available empirical studies however, no statistically significant causal link has been found between an increase in transaction costs transaction taxes or government-controlled minimum brokerage commissions and a reduction in volatility—in fact a frequent unintended consequence observed by 'early adopters' after the imposition of a financial transactions tax see Werner,  has been an increase in the volatility of stock market returns, usually coinciding with significant declines in liquidity market volume and thus in taxable revenue Umlauf, For a recent evidence to the contrary, see, e.
As Liu and Zhu point out, [ When James Tobin was interviewed by Der Spiegel in , the tax rate he suggested was 0. Others have tried to be more precise or practical in their search for the Tobin tax rate. According to Garber , competitive pressure on transaction costs spreads in currency markets has reduced these costs to fractions of a basis point. For example, the EUR. Accordingly, one of the modern Tobin tax versions, called the Sterling Stamp Duty , sponsored by certain UK charities, has a rate of 0. Sterling Stamp Duty supporters argue that this tax rate would not adversely affect currency markets and could still raise large sums of money.
The same rate of 0. A CTT tax rate designed with a pragmatic goal of raising revenue for various development projects, rather than to fulfill Tobin's original goals of "slowing the flow of capital across borders" and "preventing or managing exchange rate crises" , should avoid altering the existing "fundamental market behavior", and thus, according to Schmidt, must not exceed 0.
The mathematician Paul Wilmott has pointed out that while perhaps some trading ought to be discouraged, trading for the hedging of derivatives is generally considered a good thing in that it can reduce risk, and this should not be punished. He estimates that any financial tax should be at most one basis point so as to have negligible effect on hedging. Assuming that all currency market participants incur the same maximum level of transaction costs the full cost of the bid-ask spread , as opposed to earning them in their capacity of market makers , and assuming that no untaxed substitutes exist for spot currency markets transactions such as currency futures and currency exchange-traded funds , Schmidt finds that a CTT rate of 0.
Although Tobin had said his own tax idea was unfeasible in practice, Joseph Stiglitz , former Senior Vice President and Chief Economist of the World Bank , said, on October 5, , that modern technology meant that was no longer the case. Stiglitz said, the tax is "much more feasible today" than a few decades ago, when Tobin recanted. However, on November 7, , at the G20 finance ministers summit in Scotland, Dominique Strauss-Khan , head of the International Monetary Fund , said "transactions are very difficult to measure and so it's very easy to avoid a transaction tax. Nevertheless, in early December , economist Stephany Griffith-Jones agreed that the "greater centralisation and automisation of the exchanges and banks clearing and settlements systems In January , feasibility of the tax was supported and clarified by researcher Rodney Schmidt, who noted "it is technically easy to collect a financial tax from exchanges First dealers agree to a trade; then the dealers' banks match the two sides of the trade through an electronic central clearing system; and finally, the two individual financial instruments are transferred simultaneously to a central settlement system.
Thus a tax can be collected at the few places where all trades are ultimately cleared or settled. Based on digital technology, a new form of taxation, levied on bank transactions, was successfully used in Brazil from to and proved to be evasion-proof, more efficient and less costly than orthodox tax models. In his book, Bank transactions: pathway to the single tax ideal , Marcos Cintra carries out a qualitative and quantitative in-depth comparison of the efficiency, equity and compliance costs of a bank transactions tax relative to orthodox tax systems, and opens new perspectives for the use of modern banking technology in tax reform across the world.
There has been debate as to whether one single nation could unilaterally implement a "Tobin tax. In the year , "eighty per cent of foreign-exchange trading [took] place in just seven cities. Agreement [to implement the tax] by [just three cities,] London, New York and Tokyo alone, would capture 58 per cent of speculative trading. Wrobel examined the actual international experiences of various countries in implementing financial transaction taxes. In January , Sweden introduced a 0.
Once the taxes were eliminated, trading volumes returned and grew substantially in the s. In , U. This was proposed domestically for the United States only. Schwabish examined the potential effects of introducing a stock transaction or "transfer" tax in a single city New York on employment not only in the securities industry, but also in the supporting industries. A financial transactions tax would lead to job losses also in non-financial sectors of the economy through the so-called multiplier effect forwarding in a magnified form any taxes imposed on Wall Street employees through their reduced demand to their suppliers and supporting industries.
The author estimated the ratios of financial- to non-financial job losses of between to , that is "a 10 percent decrease in securities industry employment would depress employment in the retail, services, and restaurant sectors by more than 1 percent; in the business services sector by about 4 percent; and in total private jobs by about 1 percent.
It is also possible to estimate the impact of a reduction in stock market volume caused by taxing stock transactions on the rise in the overall unemployment rate. The cost of currency hedges —and thus "certainty what importers and exporters' money is worth"—has nothing to do with volatility whatsoever, as this cost is exclusively determined by the interest rate differental between two currencies. Nevertheless, as Tobin said, "If Financial transaction tax rates of the magnitude of 0. In positive economics studies however, where due reference was paid to the prevailing market conditions, the resulting tax rates have been significantly lower. For instance, Edwards concluded that if the transaction tax revenue from taxing the futures markets were to be maximized see Laffer curve , with the tax rate not leading to a prohibitively large increase in the marginal cost of market participants, the rate would have to be set so low that "a tax on futures markets will not achieve any important social objective and will not generate much revenue.
Opinions are divided between those who applaud that the Tobin tax could protect countries from spillovers of financial crises, and those who claim that the tax would also constrain the effectiveness of the global economic system, increase price volatility , widen bid—ask spreads for end users such as investors, savers and hedgers, and destroy liquidity.
Lack of direct supporting evidence for stabilizing volatility-reducing properties of Tobin-style transaction taxes in econometric research is acknowledged by some of the Tobin tax supporters:. Ten studies report a positive relationship between transaction taxes and short-term price volatility, five studies did not find any significant relationship. Schulmeister et al, , p. These Tobin tax proponents propose on indirect evidence in their favor, reinterpreting studies which do not deal directly with volatility, but instead with trading volume with volume being generally reduced by transaction taxes, though it constitutes their tax base, see: negative feedback loop.
This allows these Tobin tax proponents to state that "some studies show implicitly that higher transaction costs might dampen price volatility. This is so because these studies report that a reduction of trading activities is associated with lower price volatility. Some Tobin tax supporters argue that volatility is better defined as a "long-term overshooting of speculative prices"   than by standard statistical definitions e. The lack of empirical evidence to support or clearly refute the Tobin tax proponents' claim it will reduce "excess" volatility is due in part to a lack of an agreed definition of "excess" volatility that allows to be distinguished and formally measured.
The Tobin tax rests on the premise that speculators ought to be, as Tobin puts it, "dissuaded. On the other side of the debate were the leaders of Germany who, in May , planned to propose a worldwide ban on oil trading by speculators, blaming the oil price rises on manipulation by hedge funds. At that time India, with similar concerns, had already suspended futures trading of five commodities. This [ proposed financial transaction tax ] legislation will force Wall Street to do their part and put people displaced by that crisis back to work. On January 21, , President Barack Obama endorsed the Volcker Rule which deals with proprietary trading of investment banks  and restricts banks from making certain speculative kinds of investments if they are not on behalf of their customers.
Federal Reserve Chairman Paul Volcker , President Obama's advisor, has argued that such speculative activity played a key role in the financial crisis of — Volcker endorsed only the UK's tax on bank bonuses, calling it "interesting", but was wary about imposing levies on financial market transactions, because he is "instinctively opposed" to any tax on financial transactions. In February , Tim Harford, writing in the Undercover Economist column of the Financial Times , commented directly on the claims of Keynes and Tobin that 'taxes on financial transactions would reduce financial volatility'.
In , researchers like Aliber et al. Researchers have used models belonging to the GARCH family    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.
Hanke et al. According to Stephan Schulmeister, Margit Schratzenstaller, and Oliver Picek , 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 currency derivatives and 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. 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.
According to Stephan Schulmeister, Margit Schratzenstaller, and Oliver Picek , restricting the financial transactions tax to foreign exchange only as envisaged originally by Tobin would not be desirable. On October 5, , 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. One non-tax regulatory equivalent of Tobin's very narrow original tax is to require "non-interest bearing deposit requirements on all open foreign exchange positions. However, they would not raise funds for other purposes, so are not a tax. From Wikipedia, the free encyclopedia. For the more general category of "financial transaction taxes", see Financial transaction tax.
For the more general category of "currency transaction taxes", see Currency transaction tax. This article's tone or style may not reflect the encyclopedic tone used on Wikipedia. See Wikipedia's guide to writing better articles for suggestions. November Learn how and when to remove this template message. Academic Mihir A. Desai Dhammika Dharmapala James R. Hines Jr. By country. Main article: Spahn tax. Main article: Reaction to the Tobin Tax. Main article: European Union financial transaction tax. Opposing EU countries. Undecided Euro countries. Undecided Non-Euro countries.
See also: Financial transaction tax. See also: Stamp Duty Reserve Tax. See also: Currency transaction tax and Financial transaction tax. Money portal. Eastern Economic Journal. Archived from the original on Retrieved Der Spiegel Archived from the original on 6 June Jubilee Research, a successor to Jubilee UK. Archived from the original on 6 March Retrieved 11 February Retrieved 1 January Klingt das nicht wie Ihr Vorschlag? Aber darum ging es mir gar nicht. So schreckt man Spekulanten ab. English Summaries [of quotes in Spiegel Online]. Spiegel Online International. Archived from the original on 7 October Archived from the original on 14 September Retrieved 13 August Europe's Monetary Future.
Fairleigh Dickinson Univ Press. Online publisher: Project Gutenberg of Australia eBooks; via biblioeconomicus. Archived PDF from the original on October 11, Archived PDF from the original on 6 August Financial Times. EU inside. Archived from the original on 3 March Retrieved 26 February