The next time a client complains about the complexity of our tax system, tell them about the proposed financial transactions tax, or FTT. The European Union is moving close to agreeing on an FTT that at the beginning will apply to 11 member states, including France and Italy.

What at first glance might seem a straightforward tax calculation in fact involves a complex process including rebating and netting, amendments to back-dated trades, and the retrieval of missing data, according to Daniel Carpenter, head of business development – Europe, for solutions provider GBST.

"Add to the mix the varying systems interfaces and trading format, global mandates and the differing of the broker and custodian, and one then begins to appreciate the task that capital market players face," he said.

Basically, the FTT, also known as the "Robin Hood Tax," imposes a fee on every purchase or sale of a stock, a bond, a futures contract, an options contract, or any other commonly traded financial instrument. It is also called a Tobin Tax, named after U.S. economist James Tobin, who first proposed the idea in 1972.

Although it has been talked about and proposed and rejected in various forms over the years, it looks as though this time it will take effect.

In addition to revenue raising, proponents see the tax as a way of punishing financial institutions, which they believe are to blame for various economic crises in the past decade. They also see it as discouraging high-frequency trading, and look to the revenue to combat global warming and poverty.

Could it happen here? Several bills were introduced during the 112th Congress that proposed the establishment of an FTT, according to partners at K&L Gates LLP. And a bill, H.R. 6616, was introduced which would prohibit the Treasury Secretary from assisting any foreign government with the collection of taxes on transactions occurring on U.S. exchanges. The U.S. Chamber of Commerce supports this bill. (Although we are currently in the 113th Congress, it is likely that these will be reintroduced in one form or another).

Is all this just another step on our inexorable march toward socialism? Opponents say it will have a negative effect on pension funds, the insurance industry and lenders, and will end up harming the middle class.

Obviously, the name "Robin Hood Tax" conveys the idea that it robs from the rich and gives to the poor. Robin Hood, however, never heard of the Laffer Curve, and might have changed his tune had he known the overall negative effects his activities would have on the economy. After all, he took resources that could otherwise have been available to invest in factory startups. They appeared eventually, but not until several centuries later.

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