The lawmakers say the tax -- would apply to every transaction made in the United States or by a U.S. person including retail investors -- would be assessed on 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. 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,” said Sen. Chris Van Hollen (D-Md.), who has cosponsored the House bill.
The Communications Workers of America, which represents 700,000 workers in telecommunications, customer service, media, airlines, public service and manufacturing, said the act would make the U.S. tax system fairer and put the brakes on corporate greed.
“The Wall Street Tax Act is a good step toward leveling the financial playing field for working families and making sure Wall Street traders and speculators pay their fair share,” CWA President Chris Shelton said in a prepared statement. “The bill will put the brakes on Wall Street speculation and excesses by closing the loophole that allows Wall Street traders to avoid the kinds of sales tax that working families pay every day. We’re proud to support this bill, which would help address the rigged tax code that rewards the wealthy at the expense of the rest of us.”
Those claims will not go unanswered. Kyle Pomerleau, chief economist and vice president of economic analysis at the Tax Foundation said the tax appears to be “taxing income multiple times.”
The lawmakers claim by increasing transaction costs slightly, the legislation would redirect money to “more productive” areas of the economy and reduce the risk of financial crashes.
While the financial crisis had many causes “volume of stock trades was not one of them,” Pomerleau said.