Democratic Rep. Introduces Legislation To Tax Financial Transactions

[Bill USA]

http://thinkprogress.org/economy/2013/04/17/1879801/ellison-financial-transactions-tax/

Minnesota Rep. Keith Ellison (D), a member of the Congressional Progressive Caucus, will today introduce legislation that would institute a tax on financial transactions, an effort to raise needed revenue while also limiting risky high-speed trading that has increased volatility in financial markets.

Ellison’s legislation, The Inclusive Prosperity Act, would levy a 0.5 percent tax on stock trades, a 0.1 percent tax on bond trades, and a 0.005 percent tax on trades of derivatives and other investments. Three Democrats — Rep. Peter DeFazio (OR) and Sens. Tom Harkin (IA) and Sheldon Whitehouse (RI) — introduced similar legislation earlier this year that would institute a 0.03 percent tax on all financial trades. That proposal would raise $352 billion over the next decade; Ellison’s seeks to raise roughly $350 billion annually.

“This is a small tax on financial transactions that will allow us to meet the needs of our nation,” Ellison said at the press conference. “And didn’t America step up, on very short notice, for Wall Street when it needed help? Well now the American people need help.”

Such a tax would slow down financial markets that have increased in both speed and volatility thanks to high-frequency trading, which allows firms to use algorithms to make thousands of trades per second. Opponents of a transactions tax argue that it would slow down economic activity and growth, but those claims are hardly proven: the U.S. had a transactions tax after World War II, when it experienced its largest period of growth. While most industry groups oppose the tax, some former financial leaders have come out in favor. “A modest financial transaction tax of less than 1 percent would serve as a remarkably efficient tool to achieve needed reform,” John Fullerton, a former director at JP Morgan Chase, wrote in 2011.
(more)

[still_one]

1. Funny that the tax on derivatives is much smaller than on stocks and bonds, where derivatives are

What creates a lot of the volatility

[MrYikes]

2. What does Senator Warren say about this subject?

[66 dmhlt]

5. Warren Supports Financial Transaction Tax

Warren has pushed for new regulations on banks and hedge funds, higher taxes on the wealthy, and a new sales tax on financial transactions. She has also pushed for measures to protect customers of sketchy deals, such as subprime mortgage loans and payday loans.

http://www.examiner.com/article/elizabeth-warren-wins-coveted-committee-seat-despite-opposition

[cilla4progress]

3. It would be fabulous to have this tax

in place.

[yurbud]

4. why so little? Set the rate to take in the same amount they demanded in extortion in 2008

$700 billion--every year.

[4dsc]

6. If its supported by 90% of the people it will not come to pass

just saying. But its an idea that need to be pressed.

[aandegoons]

7. I did not see anything in your post about 401k's

I surely hope they exempt them. I try to keep an eye on my families 401k and do a couple of moves a year and it is already hard enough to save enough for retirement.