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Bloomberg proposes financial transaction tax

Bloomberg proposes financial transaction tax
© Greg Nash

Democratic presidential candidate Michael BloombergMichael BloombergBiden's great challenge: Build an economy for long-term prosperity and security The secret weapon in Biden's fight against climate change Sanders celebrates Biden-Harris victory: 'Thank God democracy won out' MORE on Tuesday proposed a financial transaction tax (FTT) as part of a wide-ranging financial reform plan the billionaire former New York City mayor unveiled ahead of Wednesday's debate.

Bloomberg is proposing to work with Congress to implement a 0.1 percent tax on transactions for stocks, bonds and derivatives. He is calling for the tax to be phased in over time, starting at 0.02 percent, to limit any unintended consequences, according to a document from his campaign.

"Some of the world’s leading financial centers, such as the United Kingdom and Hong Kong, have found that taxing financial transactions can raise significant revenue, both to defray the costs of overseeing markets and to address other social needs," the campaign document reads. "Such taxes can also help address inequality."

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Bloomberg's campaign cited a 2015 paper from the Urban-Brookings Tax Policy Center that found that most of the tax burden from an FTT would fall on high-income households.

Bloomberg's call for a tax on financial trades comes one day before he qualified to participate in his first Democratic presidential debate in Nevada.

Bloomberg — who amassed his fortune by creating a financial information company and has spent millions of dollars of his own money on his campaign — has seen rising levels of support in polls but has been facing criticisms from progressives about some of his past comments about financial regulations.

Earlier this month, Bloomberg released a slew of other tax proposals focused on increasing taxes on wealthy individuals and corporations. These proposals included raising the top individual income rate from 37 percent to 39.6 percent, creating a 5-percent surtax on incomes above $5 million and raising the corporate tax rate from 21 percent to 28 percent.

Other Democratic presidential candidates who have proposed FTTs include progressive Sens. Bernie SandersBernie SandersFive House Democrats who could join Biden Cabinet Biden names John Kerry as 'climate czar' in new administration In the final chapter of 2020, we must recommit to repairing our democracy MORE (I-Vt.) and Elizabeth WarrenElizabeth WarrenOn The Money: Biden to nominate Yellen for Treasury secretary | 'COVID cliff' looms | Democrats face pressure to back smaller stimulus Biden to nominate Janet Yellen as Treasury secretary: report Bottom line MORE (D-Mass.), as well as former South Bend, Ind., Mayor Pete ButtigiegPete Buttigieg'Biff is president': Michael J. Fox says Trump has played on 'every worst instinct in mankind' Buttigieg: Denying Biden intelligence briefings is about protecting Trump's 'ego' Biden's win is not a policy mandate — he should govern accordingly MORE, who, like Bloomberg, is positioning himself as a moderate. Taxes on financial trades also have the support from a number of left-leaning organizations.

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But the business community and Republicans have been pushing back on Democratic candidates' proposals for FTTs.

The U.S. Chamber of Commerce released a report in September arguing that FTTs would be paid by ordinary investors saving for their retirements and that FTTs in other countries have raised less revenue than expected. At a hearing in December, House Republicans and Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike Democrats accuse Mnuchin of sabotaging economy in dispute with Fed The Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Pence, Biden wage tug of war over pandemic plans MORE expressed concerns about FTTs, with Mnuchin saying he was worried that this type of tax would hurt the U.S. capital markets and Americans who have mutual funds.

"The U.S. wisely repealed a Financial Transaction Tax we had in place over 40 years ago, but it appears advocates failed to learn from our past," Tom Quaadman, executive vice president for the U.S. Chamber’s Center for Capital Markets Competitiveness, said in a statement Tuesday. "A Financial Transaction Tax will increase the cost of capital, decrease investment, harm businesses and hurt Americans who are saving and investing.”

- updated at 2:46 p.m.