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 DeFazioBoeing debacle shows need to investigate Trump-era corruption FAA comes under new scrutiny over Boeing decision The Hill's Morning Report - Trump, Senate GOP clash over Yemen, border security MORE (D-Ore.), who has offered similar bills in the past, and in the upper chamber by Sen. Brian SchatzBrian Emanuel Schatz Advocate says Trump administration's new proposal would do 'absolutely nothing' to alleviate student debt Hillicon Valley: Huawei official asks US to ease restrictions | Facebook loses top execs | Defense officials hit Google over China | Pro-Trump 'safe space' app pulled over security flaw | Senators offer bill on facial recognition technology Senators introduce bill to regulate facial recognition technology MORE (D-Hawaii).

ADVERTISEMENT

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 PocanTwo lawmakers just debated the merits of Nickelback on the House floor On The Money: Mnuchin urges Congress to raise debt limit 'as soon as possible' | NY officials subpoena Trump Org's longtime insurer | Dems offer bill to tax financial transactions Sanders, Ocasio-Cortez back 'end the forever war' pledge MORE (D-Wis.) and Pramila JayapalPramila JayapalOn The Money: Trump issues emergency order grounding Boeing 737 Max jets | Senate talks over emergency resolution collapse | Progressives seek defense freeze in budget talks Progressives seek defense freeze in budget talks House Dems reintroduce the Dream Act MORE (D-Wash.), and prominent freshman Rep. Alexandria Ocasio-CortezAlexandria Ocasio-CortezPlaying the Green New Deal numbers game Ocasio-Cortez calls out elite Stuyvesant High School for admitting only 7 black students Personal responsibility is not enough to fix climate change 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 WarrenDem lawmaker says Electoral College was 'conceived' as way to perpetuate slavery GOP rep to introduce constitutional amendment to limit Supreme Court seats to 9 Warren introduces petition to end the Electoral College MORE (D-Mass.), a presidential candidate, has proposed a wealth tax. And Sen. Bernie SandersBernard (Bernie) SandersAlan Dershowitz: In defense of Chelsea Clinton O'Rourke: Decisions on late-term abortions 'best left to a woman and her doctor' CNN to host town hall with Cory Booker in South Carolina 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 ClintonDem lawmaker says Electoral College was 'conceived' as way to perpetuate slavery Dem strategist says Donna Brazile is joining Fox News 'for the money' CNN to host town hall with Cory Booker in South Carolina 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.