Robin Hood Tax

A proposed small tax on financial trades are growing in popularity as a means in which income can be re-distributed from the wealthy to the poor, which is being referred to as a Robin Hood Tax. This is similar to the Tobin tax - originally suggested by Nobel laureate James Tobin after the collapse of the Bretton Woods foreign exchange rate system in the 1970's.

Many are in favor of this type of tax, as they would not be directly effected by the tax, since they are not directly trading financial assets, and it would raise tax revenue to support government policies that would benefit the poor.

As I show in Prin. of Microeconomics, the burden of a per unit tax (i.e. the ones who will pay more of the tax) falls on the side of the market that is more price inelastic (less sensitive to changes in prices). As financial market suppliers are highly price sensitive, I think this type of a tax (if it is a per unit tax) would fall less on the banks and more on private investors and pension funds.

Additionally, the deadweight loss of the tax (loss to society due to government intervention in the market) would be rather high, as both the demand and supply elasticities are rather high.