WASHINGTON (March 19, 2019)—Congressional Democrats have proposed legislation to establish a tax on Wall Street transactions that would generate billions of dollars in revenue.
Sens. Chris Van Hollen, D-Maryland, Brian Schatz, D-Hawaii, and Rep. Peter DeFazio, D-Oregon, said their Wall Street Tax Act of 2019 would impose a .01 percent tax on all transactions. The bill also would aim to limit "speculative trading."
The tax would net the government an estimated $776.7 billion over the next 10 years, according to Democrats on the Joint Committee on Taxation.
"This tiny high-roller fee will help curb this risky behavior," Van Hollen said in a statement, "while generating revenue that we can invest in growing our real economy and helping hardworking families."
In 2019, the legislation would generate a short-term loss.
The tax, the committee said, would lower the value of financial assets in the short term and could lead to a prolonged dip in capital gains, both of which are accounted for in the committee's estimate.
Still, proponents of the bill believe its long-term benefits—such as slowing high-speed trading to settle the market and promoting long-term investments—more than make up for any potential shortfalls at the onset.
"A tiny tax on Wall Street trades can make a big change," Lisa Gilbert, vice president of legislative affairs for Public Citizen, a Washington-based think tank and non-profit consumer rights group, said in a statement. "A rate of just 10 cents out of every $100 traded will still stack up to big money that can rejuvenate American communities. It's time for all members of Congress to join the call to rebuild Main Street on Wall Street's dime."
Despite the legislation's widespread Democratic support, the bill isn't without its opponents.
Brian Graff, the CEO of the American Retirement Association, called the bill the "Main Street savings attack" in a statement last week.
He takes issue with the bill's taxation of mutual funds, pensions and 401(k)s, which he claims needlessly hurts middle class and retired workers.
"Every week, millions of Americans sacrifice to set aside part of their hard-earned pay for retirement, investing those savings," Graff said. "It appears that some in Congress may think that the only people who invest are super rich."
But for congressional Democrats, the merits of generating tax revenue and curbing speculation outweigh the concerns of the legislation's opponents.
"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. "My bill will help discourage this kind of risky, volume-based trading."
In the Democrat-controlled House, the party should have no issue moving the bill, but its future in the GOP-run Senate would appear to be dim.