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 DeFazio737 crisis tests Boeing's clout in Washington Senate panel to hold hearing on airline safety after Boeing crashes Boeing debacle shows need to investigate Trump-era corruption MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzLawmakers urge tech to root out extremism after New Zealand Advocate says Trump administration's new proposal would do 'absolutely nothing' to alleviate student debt Hillicon Valley: Huawei official asks US to ease restrictions | Facebook loses top execs | Defense officials hit Google over China | Pro-Trump 'safe space' app pulled over security flaw | Senators offer bill on facial recognition technology 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 PocanTwo lawmakers just debated the merits of Nickelback on the House floor On The Money: Mnuchin urges Congress to raise debt limit 'as soon as possible' | NY officials subpoena Trump Org's longtime insurer | Dems offer bill to tax financial transactions Sanders, Ocasio-Cortez back 'end the forever war' pledge MORE (D-Wis.) and Pramila JayapalPramila JayapalJudiciary Dem: House investigations must 'start at the beginning' before discussing impeachment Dem support grows for allowing public funds to pay for abortions On The Money: Trump issues emergency order grounding Boeing 737 Max jets | Senate talks over emergency resolution collapse | Progressives seek defense freeze in budget talks MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezHow to stand out in the crowd: Kirsten Gillibrand needs to find her niche Romney helps GOP look for new path on climate change Overnight Energy: Interior reverses decision at heart of Zinke criminal probe | Dem divisions deepen over approach to climate change | GM to add 400 workers to build electric cars 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 WarrenHow to stand out in the crowd: Kirsten Gillibrand needs to find her niche Biden, Sanders edge Trump in hypothetical 2020 matchups in Fox News poll Omar controversies shadow Dems at AIPAC MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernard (Bernie) SandersHow to stand out in the crowd: Kirsten Gillibrand needs to find her niche Biden, Sanders edge Trump in hypothetical 2020 matchups in Fox News poll O'Rourke tests whether do-it-yourself campaign can work on 2020 stage 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 ClintonHow to stand out in the crowd: Kirsten Gillibrand needs to find her niche Ex-Clinton aide: Dems should make 2020 'about integrity' Trump mounts Rust Belt defense 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.