The Democratic Party’s proposed 2016 platform supports “a financial transaction tax on Wall Street” -- but presumptive nominee Hillary Clinton is focused on a narrower approach that isn’t likely to target big banks.
Clinton and her advisers propose taxing some high-frequency traders who spam markets with thousands of orders they later cancel. That levy would affect a comparatively small number of firms -- none of them household names -- and Clinton isn’t likely to expand it into a tax on all trades of stocks, bonds and derivatives, according to senior policy analysts familiar with her campaign.
“Those of us who’ve advocated for a tax on financial transactions have something much more encompassing in mind than a tax on canceled orders,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, who said he’s in touch with Clinton’s campaign on the issue. “You can argue that this is a very narrow version.”
The difference in approaches highlights Clinton’s complicated relationship with Wall Street. Her campaign has weathered criticism over millions of dollars in speaking fees she accepted from big banks and other interests after stepping down as secretary of state in 2013. At the same time, she has called for imposing a “risk fee” on the largest financial institutions, for toughening rules against big banks engaging in speculative trading and for other measures aimed at strengthening bank regulation.
While party platforms are mostly symbolic, and have no formal hold over a candidate, the Democrats’ emerged after a lengthy discussion aimed at promoting unity among supporters of Clinton and those of Vermont Senator Bernie Sanders, who had challenged her for the nomination. Sanders endorsed Clinton on Tuesday.
The platform, finalized last weekend in Orlando, Florida, specifically endorses “a financial transactions tax on Wall Street to curb excessive speculation and high-frequency trading, which has threatened financial markets.” It also says: “We acknowledge that there is room within our party for a diversity of views on a broader financial transactions tax.”
That language constitutes a nod to Sanders, who had proposed a broader tax on financial transactions. Similar to taxes in France and Italy, his proposal would have assessed a 0.5 percent rate on stock trades, 0.1 percent on bond trades and 0.005 percent on derivatives trades.
“We got this language about a ‘financial transactions tax’ in the Democratic platform for the first time in history,” said Warren Gunnels, the top policy adviser to Sanders’s campaign. Sanders supporters will continue a “grassroots movement” to support his proposal, Gunnels said.