Sens. Brian Schatz (D-HI) and Chris Van Hollen (D-MD) joined Rep. Peter DeFazio (D-OR) to introduce the Wall Street Tax Act, which they said creates a progressive tax on financial transactions while addressing economic inequality.
The lawmakers said the bill would also reduce high risk and volatility in the market.
Officials said the measure addresses the disconnect between the financial system and the real economy by reducing unproductive and speculative trading – adding by
increasing transaction costs slightly, the bill redirects investment that has flooded into transactions without economic value into more productive areas of the economy.
“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. “My bill will help discourage this kind of risky, volume-based trading and bring in billions in new revenue.”
The lawmakers said the bill would tax the sale of stocks, bonds, and derivatives at 0.1 percent and would raise an estimated $777 billion over a decade. A stock trade of $1,000 would incur a tax of just one dollar. The tax would apply to the fair market value of equities and bonds, and the payment flows under derivatives contracts.
“Risky financial behaviors like near-instantaneous high-volume trades have destabilized our financial markets while contributing nothing to the economy,” DeFazio said. “Congress needs to rein in excessive speculative activity and protect working families from these dangerous practices while maintaining appropriate market liquidity. This legislation will curb unnecessary speculation and generate much-needed revenue to help the federal government fund national priorities and invest in the real economy to benefit all Americans.”