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 SchatzOn 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 Bottom Line 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 PocanOn the USMCA, Pelosi can't take yes for an answer Overnight Defense: House approves 3 billion defense bill | Liberal sweeteners draw progressive votes | Bill includes measure blocking Trump from military action on Iran House approves defense bill after adding liberal sweeteners MORE (D-Wis.) and Pramila JayapalPramila JayapalActivist: Exclusion of domestic workers from federal labor laws 'a legacy of slavery' How Trump suddenly brought Democrats together on a resolution condemning him House votes against striking Pelosi remarks from record MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezPhiladelphia mayor: Trump would 'go to hell' if he had to go back to where he came from Republicans scramble to contain Trump fallout The four Republicans who voted to condemn Trump's tweets 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 WarrenHarris tops Biden in California 2020 poll The Hill's Morning Report - A raucous debate on race ends with Trump admonishment Democrats fret over Trump cash machine MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersSanders to call on 2020 Democrats to reject money from drug, health insurance industries The hidden connection between immigration and health care: Our long-term care crisis Harris tops Biden in California 2020 poll 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 thanks 'vicious young Socialist Congresswomen' for his poll numbers Will Trump's racist tweets backfire? Democrats fret over Trump cash machine 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.