U.S. financial transaction tax bill introduced in Congress

020413 harkin
Sen. Tom Harkin

Legislation introduced Thursday by Sen. Tom Harkin, D-Iowa, and Rep. Peter DeFazio, D-Ore., would impose a 0.03% tax beginning in 2014 on non-consumer financial trading, including stocks, bonds and other debts after their initial issuance, and would include derivative contracts, options, puts, forward contracts and swaps.

The backers say the law would discourage speculative and high-speed trading and raise as much as $352 billion over 10 years, according to estimates for a similar proposal floated in the last Congress.

“We need the new revenue that would be generated by this tax in order to reduce deficits and maintain critical investments in education, infrastructure and job creation,” Mr. Harkin said in a statement.

Previous versions of the idea have differed on whether to exempt pension fund transactions from the tax, and congressional aides said many details have yet to be addressed.

Observers say it would take a lot of tweaking to get broader support.

“With transaction taxes gaining traction in Europe, it is hardly a surprise that Sen. Harkin and Congressman DeFazio have decided to reintroduce their bill. But with many within the Obama administration — not to mention many or even most of their Democratic colleagues in Congress — opposed to this concept, it seems highly unlikely their bill will ever become law,” said Derek B. Dorn, partner in law firm Davis & Harman and former senior Senate tax aide.