The Wall Street Tax Act (H.R. 3313) was announced on March 5 with great fanfare. The bill’s sponsors- Rep. Peter DeFazioPeter Anthony DeFazioAmerica needs a transformative transportation bill: It will take walking and biking to get there Congress must overcome predictable PFC opposition to spur needed airport upgrades House Democrats unveil 0B infrastructure plan MORE (D-Ore.) and Sens. Brian SchatzBrian Emanuel SchatzBooker, Merkley propose federal facial recognition moratorium Poll: Majority of Democrats say Electoral College delegates should cast ballots based on popular vote Democrats praise Romney for breaking with GOP on convicting Trump MORE (D-Hawaii) and Chris Van HollenChristopher (Chris) Van HollenSenate Dems blast Barr for 'clear violation' of duty in Stone case, urge him to resign Senate Democrats introduce legislation to change impeachment trial rules Warren asks for probe of whether Trump violated law by delaying Puerto Rico funds MORE (D-Md.) made appearances on the cable news shows. The press release called it “a new progressive tax on financial transactions that would generate billions in revenue, while addressing economic inequality and reducing high risk and volatility in the market.”  According to one of the sponsors, “[t]his tiny high-roller fee will help curb this risky behavior while generating revenue that we can invest in growing our real economy and helping hard-working families.”

What the sponsors and supporters failed to mention is that the Wall Street Tax Act, as currently proposed, is also a tax on American’s retirement savings. Yes, the Wall Street Tax Act applies to 401(k) accounts, IRAs, employer-sponsored (state and private-sector) defined benefit pension plans, and even union multi-employer pension plans for coal miners, steelworkers and teamsters that are facing a major funding crisis. The participants in these plans are not the “high rollers” supposedly targeted by the Wall Street Tax Act, and they’re certainly not high frequency traders creating volatility in the market.  In fact, one-third of 401(k) participants-over 25 million American workers—make less than $50,000. Hardly the Wall Street fat cats portrayed by the bill’s sponsors.


Now, this “high-roller fee” might be “tiny” to those who actually are high rollers, but for hard-working American workers it’s anything but. The ten basis point transaction tax applies every pay day when an American worker saves in a 401(k) out of their hard-earned paycheck. It applies every day when the investments in a 401(k) plan target-date fund—a favorite of 401(k) participants—is rebalanced. And so on and so on. The Investment Company Institute estimates that the tax would have the effect of increasing the expense ratios of equity mutual funds by 31 percent. That translates to an effective increase of 20 basis points for the average target-date fund expense ratio. Over a 401(k) participant’s working life this tax adds up.  In fact, based on an analysis of the impact of 401(k) fees by the Obama administration, this “Wall Street” Tax can reduce a 401(k) participant’s retirement savings over their working life by over 5 percent.  That is certainly not tiny to an American worker trying to live in retirement.

In 2017, Democrats in Congress fought hard to protect retirement savings against the so-called “Rothification” tax reform proposals that would have taxed 401(k) contributions to pay for corporate tax cuts. Now, ironically, some Democrats with the Wall Street Tax Act are willing to undermine 401(k) retirement savings—for infrastructure supposedly.  There was a reason there was such a public outcry in 2017 when some Republicans proposed taxing 401(k) plans. Retirement security continues to be a top concern for America’s working families. Apparently, some in both political parties need to learn to stop thinking of the retirement savings of American workers as a piggy bank for their own initiatives.

Brian H. Graff, Esq., is the Chief Executive Officer of the American Retirement Association, the umbrella organization for five premier retirement industry associations; the American Society of Pension Professionals & Actuaries (ASPPA), the ASPPA College of Pension Actuaries (ACOPA), theNational Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA). For more information, visit