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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 DeFazioThe Hill's Morning Report - Presented by Tax March - US vaccine effort takes hit with Johnson & Johnson pause Pelosi wants Biden infrastructure bill done by August The Hill's Morning Report - Biden: Let's make a deal on infrastructure, taxes MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzCongress brings back corrupt, costly, and inequitably earmarks Georgia law makes it a crime to give food, water to people waiting to vote Senate Democrats reintroduce bill to create financial transaction tax 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 PocanNIH reverses Trump administration's ban on fetal tissue research NIH to make announcement on fetal tissue research policy amid Trump-era restrictions Biden defense budget criticized by Republicans, progressives alike MORE (D-Wis.) and Pramila JayapalPramila JayapalBiden angers Democrats by keeping Trump-era refugee cap Omar: 'Shameful' Biden reneging on refugee promise Biden rebuffs Democrats, keeps refugee admissions at 15,000 MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezA proposal to tackle congressional inside trading: Invest in the US Biden angers Democrats by keeping Trump-era refugee cap Omar: 'Shameful' Biden reneging on refugee promise 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 WarrenPoll: 56 percent say wealth tax is part of solution to inequality Democratic senators call on Biden to support waiving vaccine patents Democrats reintroduce bill to block US from using nuclear weapons first MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersSirota: Biden has not fulfilled campaign promise of combating union-busting tactics Democratic senators call on Biden to support waiving vaccine patents Progressives put Democrats on defense 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 ClintonPelosi on power in DC: 'You have to seize it' Cuba readies for life without Castro Chelsea Clinton: Pics of Trump getting vaccinated would help him 'claim credit' 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.