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 DeFazioTop Democrats call on AT&T and Verizon to delay 5G rollouts near airports On The Trail: Retirements offer window into House Democratic mood Democrats confront rising retirements as difficult year ends MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzForced deadline spurs drastic tactic in Congress These Senate seats are up for election in 2022 Overnight Energy & Environment — Starting from 'scratch' on climate, spending bill MORE (D-Hawaii).
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 PocanDemocrats livid over GOP's COVID-19 attacks on Biden With Build Back Better, Dems aim to correct messaging missteps Dems brace for score on massive Biden bill MORE (D-Wis.) and Pramila JayapalPramila JayapalDesperate Dems signal support for cutting Biden bill down in size Sanders, 50 Democrats unveil bill to send N95 masks to all Americans Centrist Democrats urge progressives to tamp down rhetoric MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezMan who threatened to kill Ocasio-Cortez, Pelosi pleads guilty to federal charges These Senate seats are up for election in 2022 Missouri House Democrat becomes latest to test positive for COVID-19 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 WarrenArizona Democratic Party executive board censures Sinema Democrats call on Biden administration to ease entry to US for at-risk Afghans Biden stiff arms progressives on the Postal Service MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersSunday shows - Russia standoff over Ukraine dominates Sanders says Biden can't count on him to support 'almost any' spending package compromise Sanders says Republicans are 'laughing all the way to Election Day' 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 ClintonNo Hillary — the 'Third Way' is the wrong way The dangerous erosion of Democratic Party foundations The Hill's Morning Report - Presented by Facebook - Democrats see victory in a voting rights defeat 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.