Posted on 01/22/2021 5:25:22 AM PST by Red Badger
Today, U.S. Representative Peter DeFazio (OR-04) introduced the Wall Street Tax Act, legislation to create a new tax on financial transactions that would generate billions in revenue, while reducing speculative trading and volatility in the market.
“High-frequency traders front-run the market and drive up prices for individuals, pension funds and other value investors,” said Rep. Peter DeFazio. “Some days high-frequency traders trade billions of shares that they sometimes hold for only seconds or less. They reap enormous financial benefits for themselves and their privileged elite investors but add no value to our economy. 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.”
DeFazio’s Wall Street Tax Act addresses the disconnect between the financial system and the real economy by reducing unproductive, dangerous, and speculative trading. By increasing transaction costs slightly, the bill will help redirect investment that has flooded into transactions without economic value into more productive areas of the economy. It will also reduce the risk of financial crashes and limit the risks that high-speed arbitrage pose to our financial system.
The Wall Street Tax Act would tax the sale of stocks, bonds, and derivatives at 0.1 percent (10 basis points), 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. Initial public offerings and short-term debt (with a maturity of less than 100 days) would be exempted.
A 2019 Public Citizen report found that a financial transaction tax (FTT) will primarily impact America’s wealthiest individuals, while the average annual retirement account costs for a middle-income family would range from $13 to $35. The wealthiest 10% would experience an estimated $155 in average costs relating to their retirement accounts, while many would owe additional taxes for trading stocks outside of retirement accounts. While nearly 50 percent of U.S. families owned no stock whatsoever - including indirect ownership through retirement accounts—nearly 70 percent of upper-income Americans had stock or other personal investments, outside of retirement and savings accounts.
“As Americans continue to suffer in the economic fallout from the ongoing COVID-19 crisis, Wall Street’s profits have soared,” said Susan Harley, managing director of Public Citizen’s Congress Watch division. “The Wall Street Tax Act would begin to right this unconscionable imbalance while progressively raising $777 billion over the next decade that could be used to fund any number of important societal needs like expanded health care, investments in public education, creating green energy jobs, or rebuilding America’s infrastructure. Public Citizen commends Congressman DeFazio’s strong leadership in ensuring Wall Street pays its fair share.”
“The Wall Street Tax Act is a common-sense way to help restore a measure of fairness and balance to our economy,” said Frank Clemente, Executive Director of Americans for Tax Fairness. “It would make wealthy investors who have profited throughout this pandemic pay a fairer share of taxes. The $777 billion it would raise is desperately needed to recover from this COVID-19 depression and to promote growth in our economy, building back our nation's decaying infrastructure and making new investments in things like housing, education and healthcare that will create good-paying jobs that Americans desperately need.”
“The Wall Street Tax Act would reduce incentives for Wall Street’s most reckless and least valuable speculative activity and instead encourage Wall Street to find new ways to make money from longer term, productive investments that create jobs, and develop products and services that make the U.S. competitive in a global economy,” said AFL-CIO Policy Director Kelly Ross.
“This bill is an important step in restoring the real economy for white, Black and brown working families, especially in this time of rising unemployment due to the global pandemic,” said Mandla Deskins, Take on Wall Street and Americans for Financial Reform Education Fund. “The Wall Street Tax Act would both help protect working people from the most acute impacts of risky Wall Street behavior, and raise revenue that could be used for critical public services and investments.”
The wealthiest 10 percent of Americans own an estimated 85 percent of stock market wealth. The bipartisan Tax Policy Center estimates that a tax of this kind would only apply to the highest earners in the country, with almost half of those affected belonging to the wealthiest 1 percent.
The bill has been co-sponsored by House Majority Whip James Clyburn and Reps. Earl Blumenauer (OR-03), Jamie Raskin (MD-08), Eleanor Holmes Norton (DC), Mark Takano (CA-41), Peter Welch (VT-AL), Ayanna Pressley (MA-07), Grace Napolitano (CA-32), Adam Smith (WA-09), Tim Ryan (OH-13), Pramila Jayapal (WA-07), Ro Khanna (CA-17), and Jesus “Chuy” Garcia (IL-04).
I prefer transaction tax over capital gains tax.
“I don’t trust this scheme, it would be more reassuring to legislate microtransactions out of business directly rather than pretending to do so and then tout all the money that doing so would raise. Just like the cigarette sin taxes, they promise all this money is going to be raised, but simultaneously insist that people targeted by the tax would change their behavior and avoid the conditions that would encounter the tax.”
That’s fair. That occurred to me when I read the article...they will spend it, and the money will never arrive...and they know all that.
This bill may have merit. If I have to pay income tax on my social security income just because I planned my retirement well, why shouldn’t these traders pay a transaction tax on these microsecond trades that occur only to enhance their opportunity to make a buck. The tax would not do measurable harm to a trade made to be parked in a 401K or a pension fund for an extended period of time. These micro-second traders add no wealth to our economy. They are like ticks on a deer—pure parasites living off the labor of others.
This is just the beginning. 2021 will see a flurry of tax increases as a prelude to the big heist: a raid on people’s 401K accounts. The impact on the U.S. economy will be devastating.
Wall Street owns the dems. This isn’t going anywhere.
Maybe not with Biden’s handlers. But the radical left will seize control and get it sooner or later. And it will be hilarious when it happens.
I'm not a fan of high frequency traders and, most particularly the pattern day trader rule which limits HFT to those with accounts worth over $25,000. The excuse is that HFT is too risky for the average investor. The reality is that short-term profit taking is far less risky than the "buy and hold" strategy sold to the average investor. And the government STILL collects a tax of roughly a penny per every $400 in stock sold, which is MORE than adequate to regulate Wall Street.
That being said, a bigger tax will do little to reduce high frequency traders because most of it is done by investment banks like Goldman Sachs, not some retired schmuck who wants to make a little more on an account typically worth between $25K and $100K who can least afford the tax. But I guess that's the whole idea.
HATE DeFazio.
HOWEVER, a vast amount of WALL STREET sucks.
Right, because the market was never volatile before high speed trading. This will be like the time when they banned onion futures trading and caused onion price volatility to go up.
You get what you vote for. Wall Street can’t complain.
WELL, THERE’S ALWAYS TULIPS..................................
The “radical left” are just useful idiots manipulated at will by the NWO who pull the den levers.
“This is just the beginning. 2021 will see a flurry of tax increases as a prelude to the big heist: a raid on people’s 401K accounts. The impact on the U.S. economy will be devastating.”
Yep, with all their spending plans, the country would collapse if they don’t bite into the middle class for revenue...although we are going down regardless.
The radical left are useful idiots for the Democrats. They have been for years/decades.
The idea that the radical left might meet up with Trump populism must be causing a lot of sleepless nights in the swamp.
See my post #46. They already do so. The purpose of this asinine bill isn't to end or even discourage high frequency trading.
It is to squeeze out small investors so only the big shots with program trading can afford to do it.
I know retired people who can make a little extra weekly by doing this. They can even subscribe to a level 2 viewer from places like investorhub.com for about $17/month I am learning how to do it myself in preparation for retirement.
The big ranchers hate little guys like this because they think we are poaching profits they are entitled to. That's the whole purpose of DeFazio's bill.
Old fart: "Hey, how come my 401K is losing money? Stocks are still going up?"
Sock Sales Brokerman: "Yeah, but you have to factor in our new fees?"
Perhaps Congress looks at it this way....
Yes, it is true that Dem Congressmen own lots and lots of stock and are supported by Wall Street but they get wealthy from the stock market the old fashioned way....They get inside information about future government actions and regulations and act on the information accordingly.
These nerds and techies are getting rich off the stock market through science, ingenuity and risk. These are not “honorable” means in the eyes of a congresscritter.
Graft and corruption are the only “honorable” ways to game the system.
Original :
The Wall Street Tax Act would tax the sale of stocks, bonds, and derivatives at 0.1 percent (10 basis points),
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Correction (the truth as if it were written by a true “journalist”):
The Wall Street Tax Act would tax the sale of stocks, bonds, and derivatives at “an initial rate of” 0.1 percent (10 basis points), but “several experts (name source) we spoke with agreed that the initial rate of 0.1 percent would only continue to go higher just like every other fee or tax imposed, over the past century, has done in order to raise revenues.
The top 10% own 85% of stock? Total BS.
I have some very wealthy clients. Most make their money off of real estate deals.
I am not understanding your position.
It would seem to me that small traders would hold the stock for longer periods of time. Whether that is for a full day, a full week or a full year...it doesn’t matter. The longer you hold and the fewer trades you make, the less you are impacted by the transaction tax.
I would imagine that Goldman Sachs, would have a much higher turnover volume and much shorter hold times than a smaller investor.
Can you explain why you think the proposed transaction tax would affect GS less than a small guy?
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