Legislation creating a new progressive tax on financial transactions was introduced Tuesday in the House and Senate.
Senate co-sponsors Chris Van Hollen, D-Md., and Brian Schatz, D-Hawaii, and House sponsor Peter DeFazio, D-Ore., said in a statement that the tax would generate billions of dollars in revenue, while addressing economic inequality and reducing high risk and volatility in the market.
The proposed Wall Street Tax Act would tax the sale of stocks, bonds, and derivatives at 10 basis points, and raise an estimated $777 billion over a decade. The tax would apply to the fair market value of equities and bonds, and the payment flows under derivatives contracts.
Initial public offerings and short-term debt with a maturity of less than 100 days would be exempted.
"Wall Street has made an art of high-speed trading and rank speculation that has fattened the wallets of a few while putting everyday Americans at risk," Mr. Van Hollen said in the statement. "This tiny high-roller fee will help curb this risky behavior while generating revenue that we can invest in growing our real economy and helping hard-working families."
Mr. Schatz said high-risk trades over the past decade "have made the market dangerously volatile, while doing nothing to add real value to our economy or raise wages for workers." Mr. DeFazio said in the same statement that the transaction tax will also reduce the risk of financial crashes.
The bill has two other Senate co-sponsors, Jeff Merkley, D-Ore., and Kirsten Gillibrand, D-N.Y., and 10 House co-sponsors.
The concept of a financial transaction tax to discourage high-speed trading and raise revenue for other initiatives, such as infrastructure spending, has been introduced in several sessions of Congress, mostly recently in 2016 by Mr. DeFazio.
Brian Graff, CEO of the American Retirement Association, called the idea an "attack" on retirement savers who are invested in mutual funds and other vehicles through pension funds and 401(k) accounts.
"After years of attacking 401(k) plan fees, some members of Congress now want to charge 10 basis points every time a hardworking American contributes out of their pay into their 401(k). And then charge another 10 basis points every time the account is rebalanced. And then, another 10 basis points when that worker retires and sells some of those investments," Mr. Graff said in a statement.
