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Senate Democrats reintroduce bill to create financial transaction tax

Senate Democrats reintroduce bill to create financial transaction tax
© Greg Nash

A group of Democratic senators on Thursday reintroduced legislation to create a financial transaction tax, arguing that such a tax would help to reduce economic inequality.

The bill would establish a tax of 0.1 percent on the sales of stocks, bonds and derivatives. Its reintroduction comes as stocks have seen record highs in recent weeks even as many families continue to face economic challenges as a result of the coronavirus pandemic.

“During the pandemic, Wall Street has cashed in on high-risk trades that add no real value to our economy and leave working families behind. We need to curb this dangerous trading to reduce volatility in the markets and encourage investment that can actually help our economy grow,” Sen. Brian SchatzBrian Emanuel SchatzSenators shed masks after CDC lifts mandate Financial market transactions should not be taxed or restricted Democrats face big headaches on Biden's T spending plan MORE (D-Hawaii), the lead sponsor of the bill, said in a statement. “By raising the price of financial transactions, we can make our financial system work better while bringing in billions in new revenue that we can reinvest in our workers and our communities.”

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The bill is co-sponsored by several other Democrats, including Sens. Elizabeth WarrenElizabeth WarrenSenators shed masks after CDC lifts mandate Helping students make informed decisions on college Student debt cancellation advocates encouraged by Biden, others remain skeptical MORE (D-Mass.) and Chris Van HollenChristopher (Chris) Van HollenTensions mount among Democrats over US-Israel policy Financial market transactions should not be taxed or restricted Van Hollen says members should stand with Cheney on election claims MORE (D-Md.). It also has the support of a number of labor unions. Rep. Peter DeFazioPeter Anthony DeFazioHillicon Valley: Global cybersecurity leaders say they feel unprepared for attack | Senate Commerce Committee advances Biden's FTC nominee Lina Khan | Senate panel approves bill that would invest billions in tech Top Democrat: FCC actions are a 'potential setback' to autonomous vehicles Biden's infrastructure plan builds a stronger foundation for seniors MORE (D-Ore.) reintroduced a version of the bill in the House in January.

Legislation to create a financial transaction tax faces obstacles for passage. Republicans and business groups are opposed to this type of tax, arguing that it would hurt people saving for their retirements.

Treasury Secretary Janet YellenJanet Louise YellenEconomist Richard Wolff says higher wages needed to spur faster job growth GOP governors move to cut unemployment benefits as debate rages over effects Judge rejects GOP effort to block tax provision in Biden stimulus bill MORE, a key member of President BidenJoe BidenBiden's quiet diplomacy under pressure as Israel-Hamas fighting intensifies Overnight Defense: Administration approves 5M arms sale to Israel | Biden backs ceasefire in call with Netanyahu | Military sexual assault reform push reaches turning point CDC mask update sparks confusion, opposition MORE's economic team, said last month that there is a need to examine how a financial transaction tax would impact retail investors.

"It could deter speculation, but it might also have negative impacts," Yellen said at a virtual event hosted by The New York Times.