WASHINGTON – Bernie Sanders says his plan for free college for all could be paid for with a tax on Wall Street trading, a plan that his website says will have the additional benefit of reducing “risky and unproductive high-speed trading and other forms of Wall Street speculation.”

But how would such a tax work? And could it raise the sums of money needed to provide a free college education for all?

Financial transaction taxes are not new. They’re often called Tobin taxes, for the Nobel laureate economist James Tobin, who in the early 1970s pressed for a tax on foreign exchange transactions. Tobin hoped to make foreign exchange markets more stable by curbing short-term speculation. A financial transaction tax has been levied in Great Britain since the 17th century.

A tax on Wall Street transactions likely would affect both big traders and mom-and-pop investors, and probably would impose different levies on different types of trading. Sanders’ own proposal before Congress calls for 0.5 percent on stock trades, 0.1 percent on bond trades and 0.005 percent on derivatives.

Supporters of the tax say the burden of the tax would fall largely on frequent traders, while those who buy stocks and hold on to them regardless of market conditions likely would barely notice its effect.

Such a tax has the potential to yield billions of dollars. A recent analysis by the nonpartisan Tax Policy Center found that a 0.01 percent tax rate – one-hundredth of a percentage point – could generate $185 billion over 10 years.

Financial transaction taxes “are a good way to raise money and they dampen speculation,” said Dean Baker, an economist and co-director of the Center for Economic and Policy Research. “They discourage speculation for the simple reason it’s more expensive.”

Yet many other economists discredit financial transaction taxes for exactly that reason, arguing that they ultimately reduce asset values and cause trading volumes to drop.

“You are going to earn some revenue on the tax side but you’re going to lose revenue on the capital gain side,” said James Angel, a finance professor at Georgetown University. “The net impact is going to be revenue raised is a whole lot smaller than the proponents of the bill are talking about.”

Angel thinks implementing a transaction tax would “distort the economy” and undoubtedly reduce investments. He also argues it would likely cause financial firms to pass the cost of the tax on to investors.

“The transaction tax is not going to hit the fat cat fraudsters who brought down the economy,” Angel said. “They don’t trade very often. . At the end of the day it’s your mutual fund and my pension plan that are going to end up bearing the burden of the tax.”

Other economists say a financial transaction tax could be instrumental in decreasing high-frequency trading, which occurs on powerful computers that use complex algorithms to spot trends within milliseconds. High-frequency trading is often criticized as risky and increasing volatility in the market.

“We should see trading going down,” said economist Robert Pollin, a University of Massachusetts at Amherst professor and director of the Political Economy Research Institute. “There’s nothing wrong with that; there’s excessive trading. Trading volume has gone up many, many folds.”

Pollin, much like Baker, thinks the U.S. should look at the positive effects that financial transaction taxes have had in other countries, especially in the United Kingdom, where a 0.5 percent stamp tax solely on stock trades in the London Stock Exchange generates nearly $40 billion a year.

“It’s operative in the U.K. (and the) financial market is broadly similar,” Pollin said.

The U.K.’s use of a tax on transactions stretches to 1694, when it first enacted the British stamp tax. Today, the U.K.’s stamp tax applies to the stock trades its companies make regardless of where they take place.