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 DeFazio'Design-build' contracts key to infrastructure success EPA closer to unveiling plan for tackling 'forever chemicals' Congress sends 30-day highway funding patch to Biden after infrastructure stalls MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzDefense & National Security — Military starts giving guidance on COVID-19 vaccine refusals Blinken pressed to fill empty post overseeing 'Havana syndrome' Milestone bill would bar imports linked to forest destruction 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 PocanProgressives say go big and make life hard for GOP Left doubles down on aggressive strategy Attacks on Sinema turn increasingly personal MORE (D-Wis.) and Pramila JayapalPramila JayapalManchin lays down demands for child tax credit: report Democrats step up pressure on Biden on student loan forgiveness Progressives say go big and make life hard for GOP MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezSinema's no Manchin, no McCain and no maverick Ocasio-Cortez goes indoor skydiving for her birthday Democrats fret as longshot candidates pull money, attention 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 WarrenMisguided recusal rules lock valuable leaders out of the Pentagon Biden's soft touch with Manchin, Sinema frustrates Democrats Hillicon Valley — Presented by LookingGlass — Congress makes technology policy moves MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersPressure grows for breakthrough in Biden agenda talks Sanders, Manchin escalate fight over .5T spending bill Sanders blames media for Americans not knowing details of Biden spending plan 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 ClintonTrump criticizes Justice for restoring McCabe's benefits Biden sends 'best wishes' to Clinton following hospitalization The Hill's Morning Report - Presented by Altria - Jan. 6 panel flexes its muscle 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.