House Democrats introduce securities transaction tax

Representatives in the U.S. House are considering a securities transaction tax that would impose:

• 0.25% tax on stock transactions
• 0.02% tax on futures contracts, swaps and credit default swaps
• Unspecified tax on options

The tax would be refunded for tax-favored retirement accounts, mutual funds, education savings accounts, health savings accounts, and the first $100,000 of transactions annually that aren’t already exempted.

According to Rep. Peter DeFazio, D-Ore., who proposed H.R. 4191, the Let Wall Street Pay for the Restoration of Main Street Act, “This legislation will force Wall Street to do their part and put people displaced by that crisis back to work.”

Half the revenue generated by the new tax (approximately $75 billion) would be deposited in a job creation reserve to fund the creation of good paying jobs and put Americans back to work rebuilding the nation’s infrastructure. Each $1 billion of federal infrastructure investment creates or sustains over 34,000 American jobs and $6.2 billion in economic activity.  This tax will also fund the Surface Transportation Authorization Act of 2009, which would will create or sustain over 12.5 million family wage jobs. The second half of the revenue would be used to directly reduce the deficit. 

Steve Bartlett, president and CEO of the Financial Services Roundtable, released a statement in opposition to the tax. “Nearly every American would be impacted by a new transaction tax, no matter how small it is,” Bartlett said. “It would reduce the investment accounts for all Americans and erect a roadblock to capital flowing into the system — thereby limiting job growth and productivity. The proposal will expose Americans to double taxation — once when they buy a share of stock and once when they sell it."

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