AMHERST, Mass. – Researchers from the University of Massachusetts Political Economy Research Institute (PERI) have released a working paper detailing how $300 billion could potentially be generated annually if the U.S. government would enact the Inclusive Prosperity Act, a bill first introduced in the House of Representatives in 2012 by Minnesota Rep. Keith Ellison and introduced in the Senate in 2015 by current presidential candidate Sen. Bernie Sanders of Vermont.

In the working paper “The Revenue Potential of a Financial Transaction Tax for U.S. Financial Markets,” published on the PERI website, the team of UMass economists lay out an analysis explaining that even using “a series of conservative assumptions,” the revenue generated by the financial transaction tax (FTT) called for in the bill would represent a revenue stream of approximately 1.7 percent of the current U.S. gross domestic product.

The Inclusive Prosperity Act calls for a 0.5 percent tax on stock trades, a 0.1 percent tax on bond trades and a 0.005 percent tax relative to the notional value of any derivative assets being traded. On the current presidential campaign trail, Sanders has indicated that this tax could be used as the mechanism to pay for his proposal to provide free public college education for all U.S. citizens seeking higher education.

“The idea of taxing financial market transactions—basically a sales tax on Wall Street trading—has been around for a long time,” says lead author Robert Pollin, distinguished professor in economics at UMass Amherst and co-director of PERI. “Many other countries, such as the U.K., France, Italy, and China, now operate with versions of this tax.”

Pollin and his co-authors—James Heintz, associate director of PERI and professor of economics, and graduate research assistant Thomas Herndon—found that an FTT operating at the tax rates stated above would generate about $680 billion per year, assuming that no decline in trading volume occurs. When factoring in what they admit is a high estimate of a 50 percent fall in trading revenue caused by a combination of trading volume decline and increased tax avoidance, the researchers still find that the tax yields a potential revenue of $340 billion per year.

Finally, they also considered two additional factors that may reduce the net revenue generated by the Inclusive Prosperity Act. The tax credit provision of the bill, which applies to individual taxpayers earning up to $50,000 and joint filers earning up to $75,000, would account for $20 billion of foregone revenue per year based on the researchers’ high-end estimates, lowering the overall revenue generated to $320 billion. The second factor they measured is the net change in tax revenues that results when this $320 billion is transferred out of the financial securities industry and into other activities in the economy. Once again, their high-end estimate of the net tax revenues foregone through such a transfer is approximately $20 billion per year.

“We show that the version of the tax now before Congress and supported by Sen. Sanders—the Inclusive Prosperity Act—could conservatively generate around $300 billion per year in new government revenue,” says Pollin, who assisted Ellison’s staff in drafting the 2012 version of the bill. “This would be more than enough to finance in full the Sanders proposal to provide free college tuition for all U.S. students.”

Pollin’s team concludes their paper by finding that a U.S. FTT set at the proposed rates “should not, on balance, produce any significant negative effects on productive investment spending by nonfinancial corporations.”