Watch out, Wall Street. Democrats, who have so far focused on plans to tax the super-rich, are turning their sights to capital markets.
Expect to hear a lot about financial transaction taxes. These are small levies on stock and bond trades meant to curb high-frequency trading and speculative betting, which can lead to chaotic swings in the market. Senator Brian Schatz of Hawaii became the latest Democrat to propose the idea, introducing his version on Tuesday.
The bill, which is more a political message than a plan likely to be signed into law in the coming years, would levy a 0.1 percent tax on trades of stocks, bonds and derivatives.
“Over the last decade, Wall Street has made record profits from high-risk trades that have made the market dangerously volatile, while doing nothing to add real value to our economy or raise wages for workers,” Schatz said in a statement. Representative Peter DeFazio, an Oregon Democrat, is sponsoring the idea in the House.
Schatz’s 0.1 percent tax would go further than a proposal from Senator Bernie Sanders of Vermont. Sanders, making his second presidential run, has introduced a levy of .03 percent on all Wall Street transactions. Fellow senator and presidential candidate Kirsten Gillibrand of New York has backed both plans.
The tax hike proposals are part of a shift to the left among Democrats who are openly discussing more soak-the-rich tax ideas.
Sanders has already proposed an expanded estate tax that would hit individuals worth at least $3.5 million when they die. Senator Elizabeth Warren of Massachusetts, another presidential candidate, wants to create an annual wealth tax on households valued at $50 million and more. Nearly every Democratic candidate wants to roll back President Donald Trump’s 2017 tax law, likely by raising income tax rates on individuals and corporations.
The chance that a financial transaction tax would be adopted during the Trump administration is “near zero,” and still a “long shot” if Democrats take over control of Congress and the White House in 2020, analysts at Keefe, Bruyette & Woods said in a note to clients Tuesday.
However, the idea is likely to crop up throughout the 2020 campaign. In 2016 the Democratic Party platform embraced a financial transactions tax, but left wiggle room for the size and scope of the levy.
“We support a financial transactions tax on Wall Street to curb excessive speculation and high-frequency trading, which has threatened financial markets. We acknowledge that there is room within our party for a diversity of views,” the platform said.