Nicholas Zhu

How does a 0.2% payment tax affect individual sectors of the monetary economy?

Started June 21, 2022

Abstract or project description

First I will introduce the subject matter, which is transactional tax. This tax is implemented through houses of transactions and takes 0.2% of the value of the transaction. Then I will hypothesize the effects of the tax on each relevant sector of the monetary economy. There are four major sectors of the economy with sub sectors within. At the end of discussing each sector, I will conclude the paragraph with my predicted effect of the transaction tax. During this, high-frequency trading will especially be scrutinized as I predict it will be the only specific element of the economy that will be heavily impacted by such a tax, as its very model is dependent on minimal profit. Note to add impacts on stability and the graph. After that, I will highlight the effects of the tax in the real world and economy; specifically the people, businesses, banks, and country. The people would benefit greatly from this tax change. Businesses would largely benefit as well unless involved in a major supply chain, which I will highlight. Banks would be very against it, as their business is centered around transactions. The country, as in the fed and government, would appreciate the tax greatly. Feasibility is also a big issue, as I predict many banks would be extremely against such a major tax reform. I will cite past changes and the amount of influence banks have in today’s world. I will also acknowledge that this tax is not entirely predictable, like all other reforms. Use chaos theory and other “laws” that have to do with predictions. Finally, I will conclude by highlighting the potential this tax has to reshape our society.