CBO on the Tobin Tax: "slightly" disastrous

The Tobin tax would put a very teensy tiny tax on certain kinds of financial transactions. Miniscule really. Hardly worth mentioning. Right, Congressional Budget Office?

As foreign holders of U.S. securities moved their transactions abroad, more of the market could go with them, which could diminish the importance of the United States as a major global financial market ... In the short term, a decrease in investment would lower demand for goods and services and thus reduce output and employment ... The tax might discourage short-term speculation, which can destabilize markets and lead to disruptive events (such as the October 1987 stock market crash and the more recent “flash crash,” when the stock market temporarily plunged on May 6, 2010) The transaction tax would also affect the funding of state and local pension plans ($3 trillion as of June 2011). Besides initially reducing the value of their existing assets slightly, the tax would raise transaction costs for pension plans. Both of those effects would increase required contributions to the plans.

To sum up: recession, send jobs overseas, make Really Big stock market crashes more likely, make it harder for people to save for retirement and taxing the retirement savings of the elderly more than the young, AND mess up the US bond market. Ooh, where can I sign up? /snark (HT: Newmark)