Dems offer legislation to tax financial transactions

Dems offer legislation to tax financial transactions
© Greg Nash

Democrats on Tuesday introduced legislation in the House and Senate to tax financial transactions, as lawmakers in the party examine various ways to raise more revenue.

Legislation was introduced in the House by Rep. Peter DeFazioPeter Anthony DeFazioLawmakers to question FAA chief on 737 Max review The Hill's 12:30 Report: Pelosi accuses Trump of 'bribery' in Ukraine dealings Democratic chairman presses Transportation secretary over transparency in Boeing 737 Max probe MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzThere's a lot to like about the Senate privacy bill, if it's not watered down Advocates hopeful dueling privacy bills can bridge partisan divide Key Senate Democrats unveil sweeping online privacy bill MORE (D-Hawaii).

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The House bill has the backing of a number of members of the Congressional Progressive Caucus, including the group's co-chairs, Reps. Mark PocanMark William PocanHouse progressives may try to block vote on Pelosi drug bill Overnight Health Care: House to vote next week on drug prices bill | Conway says Trump trying to find 'balance' on youth vaping | US spent trillion on hospitals in 2018 Progressive leader warns members could vote no on drug price bill as it stands MORE (D-Wis.) and Pramila JayapalPramila JayapalOvernight Health Care — Presented by Johnson & Johnson – House progressives may try to block vote on Pelosi drug bill | McConnell, Grassley at odds over Trump-backed drug pricing bill | Lawmakers close to deal on surprise medical bills Hillicon Valley: FTC rules Cambridge Analytica engaged in 'deceptive practices' | NATO researchers warn social media failing to remove fake accounts | Sanders calls for breaking up Comcast, Verizon House Democrat presses Google executives for answers on handling of health data MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezOcasio-Cortez: 'Won't you look at that: Amazon is coming to NYC anyway' House approves two-state resolution in implicit rebuke of Trump Biden: Media misinterpreted Ocasio-Cortez's impact on Democrats MORE (D-N.Y.).

Under the legislation, sales of stocks, bonds and derivatives would be taxed at a rate of 0.1 percent. The tax would apply to sales made in the U.S. or by U.S. persons, and initial securities issuances and short-term debt would be exempt.

The Joint Committee on Taxation has estimated that a similar tax would raise $777 billion over 10 years.

The legislation comes as Democrats, both in Congress and on the campaign trail, have been discussing various options to tax the wealthy and raise revenue to pay for new spending programs.

“Over the last decade, Wall Street has made record profits from high-risk trades that have made the market dangerously volatile, while doing nothing to add real value to our economy or raise wages for workers,” said Schatz. “My bill will help discourage this kind of risky, volume-based trading and bring in billions in new revenue.”

Ocasio-Cortez has suggested a top marginal tax rate of 70 percent on incomes over $10 million. Sen. Elizabeth WarrenElizabeth Ann WarrenArtist behind gold toilet offered to Trump sells banana duct-taped to a wall for 0,000 Democratic strategist: 'Medicare for All' exposes generational gap within party Yang expands campaign with senior hires for digital operations MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersDemocratic strategist: 'Medicare for All' exposes generational gap within party Yang expands campaign with senior hires for digital operations Biden: All-white debate not representative of party, but 'you can't dictate' nominee MORE (I-Vt.), another contender for the Democratic presidential nomination, has called for a significant expansion of the estate tax.

During the 2016 presidential campaign, Sanders called for a broad financial transactions tax, while eventual Democratic presidential nominee Hillary ClintonHillary Diane Rodham ClintonYang expands campaign with senior hires for digital operations Top GOP legislator in California leaves party GOP senators request interview with former DNC contractor to probe possible Ukraine ties MORE called for a tax specifically on high-frequency trading.

Supporters of financial transaction taxes argue that they would redirect investments to more productive uses and help to prevent another financial crash. The Democrats' bill is endorsed by groups including the AFL-CIO, Americans for Tax Fairness, Americans for Financial Reform and Public Citizen.

"Sen. @brianschatz and @RepPeterDeFazio are proposing a #WallStreetTax that would raise nearly $800B mostly from the wealthiest 10% that own most stocks," Americans for Tax Fairness said on Twitter. "With all that new revenue we could invest a lot more in #healthcare, #housing & #education."

But some financial industry groups have argued that such a tax would weaken markets and hurt smaller investors, such as those trying to save money for retirement.

"Imposing a tax on the sale of stocks and bonds takes money out of the pockets of individual investors as they save for their children’s college education, their retirement, or to pay for other household needs, all of which have a positive impact throughout the economy,” said Financial Services Forum President and CEO Kevin Fromer. 

Updated at 3:03 p.m.