James Tobin gave his name to a proposed tax on international currency transactions.
The Tobin tax was proposed in 1972 by American economist James Tobin. He suggested placing a small charge on foreign-exchange transactions to discourage short-term speculative movements while leaving longer-term international investment less affected.
Tobin developed the proposal after the collapse of the Bretton Woods system of fixed exchange rates. He argued that rapidly moving capital could increase financial instability and that a transaction tax might give governments more room to pursue domestic economic policies.
The phrase is sometimes used broadly for taxes on financial transactions, but Tobin’s original idea specifically concerned foreign-exchange trades. It should also be distinguished from a capital-gains tax, which is generally charged on profits from selling an asset rather than on the act of exchanging currencies.