Treasury Secretary Steven MnuchinSteven MnuchinThe Hill's Morning Report - Presented by Alibaba - Biden jumps into frenzied Dem spending talks Former Treasury secretaries tried to resolve debt limit impasse in talks with McConnell, Yellen: report Menendez, Rubio ask Yellen to probe meatpacker JBS MORE on Thursday said he has a number of worries about financial transaction taxes (FTTs) — taxes on Wall Street trades that are being proposed by progressive Democratic lawmakers and presidential candidates.
"I am very concerned that that would destroy our capital markets, and the cost to American holders of mutual funds would bear the majority of the cost," Mnuchin said at a House Financial Services Committee hearing.
Progressives, including Democratic presidential candidates Sens. Bernie SandersBernie SandersIn Washington, the road almost never taken Don't let partisan politics impede Texas' economic recovery The Hill's Morning Report - Presented by Alibaba - Democrats argue price before policy amid scramble MORE (I-Vt.) and Elizabeth WarrenElizabeth WarrenIn Washington, the road almost never taken Senate poised to battle over Biden's pick of big bank critic Treasury says more rental aid is reaching tenants, preventing evictions MORE (D-Mass.), have called for small taxes on trades of stocks, bonds and derivatives. Warren has floated an FTT to help pay for her "Medicare for All" plan, while Sanders is considering one to pay for his tuition-free college and student debt cancellation package.
Supporters of taxes on financial trades argue that these taxes would target wealthy investors and would help to reduce inequality and inefficiencies in the financial markets.
But during Thursday's hearing, Republican lawmakers brought up the Democratic proposals for FTTs, calling them problematic.
"The reality is that average everyday investors, especially mutual fund investors and those that are saving for retirement, will be severely impacted by this nefarious tax," said Rep. Patrick McHenryPatrick Timothy McHenryBiden taps big bank skeptic to for top regulatory post Lawmakers introduce bill to create commemorative coins to honor working dogs Lobbying world MORE (N.C.), the top Republican on the Financial Services Committee.
Rep. Ann WagnerAnn Louise WagnerConservative women's group endorses Sarah Huckabee Sanders for Arkansas governor FOSTA is model for reforming Section 230 Navy admiral criticizes defense contractors over lobbying efforts MORE (R-Mo.) also expressed concerns that an FTT would hurt ordinary Americans. She argued that "a financial transactions tax has already been tried internationally, and the results have been very poor."
Mnuchin said that Treasury has "committed to do some work internally and on an interagency basis to study this to see if we can try to come up with some research on what the impact would be."
Mnuchin said he thinks that an FTT could lead to financial activity moving from the U.S. to places such as London and Hong Kong. He also said it would be a "burden on economic growth, and more importantly, it would be a burden on all the American taxpayers who already pay taxes and hold mutual funds and have their savings and their retirement in mutual funds."
Additionally, Mnuchin said that the United States' borrowing costs would increase if an FTT were imposed on government securities.
Rep. Brad ShermanBradley (Brad) James ShermanOvernight Defense & National Security — Congress begins Afghanistan grilling US says about 1,500 citizens remain in Afghanistan How Congress can advance peace with North Korea MORE (D-Calif.) said that there are pros and cons with FTTs but that the concerns Wagner has "would be avoided with a wealth tax." He offered to put Wagner in touch with the economists who are helping Warren with her wealth tax proposal.
Wagner replied, "I can't wait for that debate."