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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 DeFazioDemocrats were united on top issues this Congress — but will it hold? On the Trail: Five House results illustrate a politically divided America OVERNIGHT ENERGY: Down ballot races carry environmental implications | US officially exits Paris climate accord  MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzTech CEOs clash with lawmakers in contentious hearing Bitter fight over Barrett fuels calls to nix filibuster, expand court Senate Democrats hold talkathon to protest Barrett's Supreme Court nomination 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 PocanCapitol's COVID-19 spike could be bad Thanksgiving preview Katherine Clark secures No. 4 leadership spot for House Democrats Democrats to determine leaders after disappointing election MORE (D-Wis.) and Pramila JayapalPramila JayapalInequality of student loan debt underscores possible Biden policy shift Biden Cabinet picks largely unify Democrats — so far Democrats brush off calls for Biden to play hardball on Cabinet picks MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezClub for Growth to launch ad blitz in Georgia to juice GOP turnout Trump will soon be out of office — but polarization isn't going anywhere Trump tweets Thanksgiving criticism of NFL QBs for kneeling 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 WarrenInequality of student loan debt underscores possible Biden policy shift Thomas Piketty says pandemic is opportunity to address income inequality The Memo: Biden faces tough road on pledge to heal nation MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersBiden announces all-female White House communications team The 'diploma divide' in American politics Bernie Sanders should opt for a government-created vaccine from China or Russia 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 ClintonCornyn spox: Neera Tanden has 'no chance' of being confirmed as Biden's OMB pick Groups seek to get Black vote out for Democrats in Georgia runoffs Biden's political position is tougher than Trump's 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.