Some Democrats in Washington are seizing on the recent frenetic trading in
After a House hearing Thursday to examine the GameStop issue, Representative
Investment firms and stock exchanges are lining up lobbyists and public-relations firms in hopes of stopping the tax, which could decrease trading activity and lower earnings. They see it as harmful to the average American trying to save for retirement.
Exacting a tiny sum from every securities trade is a concept that liberal Democrats, including Senators
A financial transaction tax hasn’t garnered support from some top Democrats, including Senate Majority Leader
The tax failed to gain steam a decade ago because of uncertainty over how it would affect the returns of retail investors and markets recovering from the financial crisis.
Wall Street lobbyists and Republican lawmakers also opposed the idea, often pointing out that some European countries that imposed transaction taxes later withdrew them. The tax mostly failed to raise the amounts proponents promised; it also drove securities trading and jobs to other countries.
Efforts to adopt an EU-wide levy also foundered, though some European Union member countries are again floating the
One measure now gaining traction, by Oregon Democrat
In January, South Carolina Representative
“The speculation that we’ve seen in the market, not just around GameStop but in all of the casino that is Wall Street, has raised the attention,” said
Waters said she hadn’t come to a conclusion on whether to support a transactions tax. “I’m very interested and I do think it portends possibilities for revenue that may be desperately needed,” she said.
A smaller financial transaction tax, such as one targeted to certain securities or with an extended phase-in period, is a “very real possibility,” said Compass Point Research & Trading analyst
As a candidate in 2019, President
During Thursday’s hearing, Michigan Democrat
A financial transaction tax would eat into the returns of Griffin’s Citadel businesses -- a hedge fund and a market maker -- that would be dinged every time they make a trade. Investment funds and firms that trade the most, such as high-frequency traders, could face the highest costs.
Public Citizen and other groups are circulating a letter in support of DeFazio’s bill. The levy is “an important step toward having Wall Street pay its fair share of taxes,” says the letter, whose signatories so far include the liberal Economic Policy Institute and unions such as the AFL-CIO and International Brotherhood of Teamsters.
In addition to efforts in Congress, lawmakers in New York, New Jersey and Illinois have proposed local taxes on financial transactions. In response, exchanges such as the New York Stock Exchange and market makers including
Wall Street firms are girding for battle. Investment giants and trade groups including
“Financial transaction taxes at the federal or state level unfairly target America’s mom-and-pop investors and working families saving for retirement,” said Chris Iacovella, chief executive of the American Securities Association, a trade association for regional financial services firms.
The U.S. had a stock transactions tax between 1914 and 1965. Today, a small fee is still levied against stock transactions to help fund oversight by the
A group of nonprofits in the U.K. in 2010 organized to support a financial transaction tax, even dubbing it the “Robin Hood tax,” with the idea that it would take from the rich to help the less fortunate. It caught on in the U.S. as Democratic lawmakers proposed their own bills, which never moved forward once Republicans regained control of the House in 2010.
A financial transaction tax also took the stage during the 2020 Democratic primaries. As a candidate, Vermont Senator Sanders, who now helms the Senate Budget Committee, proposed a levy on all trades as a way to finance his plan for tuition-free college.
Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, also offered a
At the time, lobbyists circulated research by Vanguard that claimed a measure similar to DeFazio’s would reduce investor returns by more than one percentage point per year. Vanguard came under fire for its assumptions, such as basing its calculation on the high turnover rate of an actively managed small-cap stock fund. The company later released estimates for more typical types of mutual funds and said in many cases the tax would hurt returns by less than 0.3 percentage point.
Vanguard spokesman Charles Kurtz said a broad financial transaction tax would do “unintended damage to everyday families saving for retirement or higher education.”
One advocacy group, the Partnership to Protect Our Retirement Future, planted paid consultants at candidates’ town hall-style meetings to frame the tax concept as an affront to retirees, the public relations firm that formed the group acknowledged to Reuters. Locust Street Group, the PR firm, didn’t respond to a request for comment.
North Carolina Representative
(Updates with analyst quote in 14th paragraph)
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