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 Pass USMCA Coalition - Deadline approaches for 2020 Dems Dems eye big infrastructure package, with or without Trump Dems, Trump pull T surprise on infrastructure MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzOvernight Energy: Democrats ask if EPA chief misled on vehicle emissions | Dem senators want NBC debate focused on climate change | 2020 hopeful John Delaney unveils T climate plan Democratic senators want NBC primary debate to focus on climate change Overnight Defense: Trump officials say efforts to deter Iran are working | Trump taps new Air Force secretary | House panel passes defense bill that limits border wall funds 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 PocanTrump-Pelosi fight threatens drug pricing talks Democrats seize on IRS memo in Trump tax battle The Memo: Trump allies see impeachment push backfiring on Democrats MORE (D-Wis.) and Pramila JayapalPramila JayapalPelosi, Nadler tangle on impeachment, contempt vote Immigration bills move forward amid political upheaval House Democrat: Seattle airport's ban on ICE detainee flights helps 'hold a lawless administration accountable' MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezOcasio-Cortez defends Dem lawmaker who said child migrant deaths were 'intentional' On The Money: Senate passes disaster aid bill after deal with Trump | Trump to offer B aid package for farmers | House votes to boost retirement savings | Study says new tariffs to double costs for consumers Murkowski celebrates birthday with electric scooter ride 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 WarrenGillibrand seizes on abortion debate to jump-start campaign CEO pay rising twice as fast as worker pay: AP Senate Democrats to House: Tamp down the impeachment talk MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersGillibrand seizes on abortion debate to jump-start campaign DNC boss says candidates to be involved in debate lottery CEO pay rising twice as fast as worker pay: AP 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 ClintonHillary Clinton slams Trump for spreading 'sexist trash' about Pelosi Gillibrand seizes on abortion debate to jump-start campaign DNC boss says candidates to be involved in debate lottery 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.