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 12:30 Report: Trump issues Taliban warning at Sept. 11 memorial Overnight Energy: Democrats call for Ross to resign over report he threatened NOAA officials | Commerce denies report | Documents detail plan to decentralize BLM | Lawmakers demand answers on bee-killing pesticide Oregon Democrats push EPA to justify use of pesticide 'highly toxic' to bees MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel SchatzState probes of Google, Facebook to test century-old antitrust laws Trump's sinking polls embolden Democrats to play hardball Hundreds of Bahamians told to leave evacuation ship headed to US: report 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 PocanOmar says US should reconsider aid to Israel Trump crosses new line with Omar, Tlaib, Israel move Liberal Democrat eyes aid cuts to Israel after Omar, Tlaib denied entry MORE (D-Wis.) and Pramila JayapalPramila JayapalPelosi woos progressives on prescription drug pricing plan Democrats ignore Asian American and Pacific Islander voters at their peril Overnight Health Care: Watchdog details severe trauma suffered by separated children | Judge approves B CVS-Aetna merger | House Dem Caucus chair backs 'Medicare for All' MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezOcasio-Cortez calls for Kavanaugh to be impeached Why are we turning a blind eye to right-wing incitement of violence? Bill Maher, Michael Moore spar over Democrats' strategy for 2020 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 WarrenThe Hill's 12:30 Report: NY Times story sparks new firestorm over Kavanaugh Working Families Party endorses Warren after backing Sanders in 2016 Warren proposes new restrictions, taxes on lobbying MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernie SandersChamber of Commerce argues against Democratic proposals for financial transaction taxes Top Sanders adviser: 'He is a little bit angry' Working Families Party endorses Warren after backing Sanders in 2016 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's economic approval takes hit in battleground states: poll This is how Democrats will ensure Trump's re-election The Hill's Morning Report - Trump takes 2020 roadshow to New Mexico 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.