Taxation and the Financial Crisis

The financial crisis triggered a global debate on the taxation of the financial sector. A number of international policy initiatives, most notably by the G-20, have called for major changes to the tax treatment of financial institutions and transactions, as well as to working practice within the financial sector.

This book examines how tax policies contributed to the financial crisis and whether taxation can play a role in the reform efforts to establish a sounder and safer financial system. It looks at the pros and cons of various tax initiatives including limiting the tax advantages to debt financing; special taxes on the financial sector; and financial transactions taxes. It examines policy concerns such as: the manner in which the financial sector should "pay" for its bailout and the role of accumulated tax losses on financial institutions' behaviour; the role that taxes may play in correcting the systemic externalities associated with "too big to fail"; the types of tax that are most appropriate for financial institutions and markets ("excess profits" versus "financial transactions taxes"); the interaction between taxes and the regulation of the financial sector; and the role of taxation in countercyclical and macroeconomic policies.

Julian Alworth holds an M.Sc. from the University of Maryland and a D.Phil from Oxford University. His research interests include business taxation with a special focus on international issues, public policies towards financial markets and institutions as well the modelling of retirement, and pension decisions.



Giampaolo Arachi holds an M.Phil. in Economics from the University of Oxford and a Ph.D. in Public finance from the University of Pavia. His research interests include the effects of taxes on business decisions and on financial markets but also local public finance and fiscal federalism issues.