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 House Democrats who voted to kill impeachment effort The Hill's Morning Report - Presented by Pass USMCA Coalition - Deadline approaches for 2020 Dems Dems eye big infrastructure package, with or without Trump MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzWarren introduces bill targeted at food insecurity on college campuses On The Money: Senators unload on Facebook cryptocurrency | Tech giants on defensive at antitrust hearing | Democrats ask Labor Department to investigate Amazon warehouses Senators unload on Facebook cryptocurrency at hearing 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 PocanThe Hill's Morning Report - Trump seizes House impeachment vote to rally GOP Here are the 95 Democrats who voted to support impeachment On The Money: Liberal Dems warn moderates against changes to minimum wage bill | House grapples with Facebook's Libra | Congress, White House inch closer to budget deal | Blue states sue over tax law regulations MORE (D-Wis.) and Pramila JayapalPramila JayapalProgressive House Democrats describe minimum wage hike as feminist issue in Teen Vogue column The Hill's Morning Report - Trump seizes House impeachment vote to rally GOP Here are the 95 Democrats who voted to support impeachment MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezTop Missouri newspaper condemns GOP's 'shameful silence' on Trump's 'racism' Restaurant in city where Trump rally held donating profits to immigrants Crowd chanting 'welcome home Ilhan' greets Omar at airport 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 WarrenNew CDC overdose estimates are nothing to celebrate 2020 Democrats react to 'send her back' chants at Trump rally Democratic Houston councilwoman announces Senate bid MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie Sanders2020 Democrats react to 'send her back' chants at Trump rally Cardi B posts message of support for Ilhan Omar #IStandWithIlhan trends after crowd at Trump rally chants 'send her back' 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 rally: 'The time has come again' to fight for democracy Trump blasts minority Democrats, rally crowd chants 'send her back' The Memo: Democrats debate Trump response – 'Being righteous and losing sucks' 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.