Rep. Lee and Sen. Sanders Introduce Tax on Wall Street Speculation Act to Curb Greed
Washington, D.C. – Today, Representative Barbara Lee (D-Calif.) and Senator Bernie Sanders (I-Vt.) introduced the Tax on Wall Street Speculation Act along with Senator Kirsten Gillibrand (D-N.Y.) and ten House Democrats.
The legislation imposes a tax of a fraction of a percent on the trades of stocks, bonds, and derivatives. This tax on Wall Street speculation, also known as a financial transaction tax, is estimated to generate up to $2.4 trillion in public revenue from wealthy investors over 10 years. An added benefit of the proposed tax is deterring the high-frequency trading that increases the instability of the financial sector and produces no economic value.
Since the Wall Street crash, 45% of all new income has gone to the top one percent. This is part of a longer-term pattern. In fact, over the past 35 years, Wall Street bonuses have surged by 1,217 percent, even as wages stagnated for most Americans. More than 1,000 economists have endorsed a tax on financial speculation, and 40 countries currently impose the tax, including Britain, which first instituted the tax on stock trades in 1694.
Over the past year, Wall Street has seen its wealth skyrocket during the pandemic, even as millions of Americans lost their jobs and struggle to put food on the table. Now it is Wall Street’s turn to rebuild the disappearing middle class and support the economic recovery.
“As our country continues to face a poverty crisis on top of a public health crisis, it is more crucial than ever that we make Wall Street pay their fair share in taxes and rein in corporate greed,” said Congresswoman Barbara Lee. “It is deeply unjust that everyday families are struggling afford basic needs, while Wall Street is seeing record profits. That’s why I’m proud to reintroduce The Tax on Wall Street Speculation Act with Senator Sanders to help generate revenue to close the income inequality gap and invest in our schools, health care, and resources to ensure the well-being of our communities.”
“Let us never forget: Back in 2008, middle class taxpayers bailed out Wall Street speculators whose greed, recklessness and illegal behavior caused millions of Americans to lose their jobs, homes, life savings and ability to send their kids to college,” said Senator Sanders. “Now that giant financial institutions are back to making record-breaking profits while millions of Americans struggle to pay the rent and feed their families, it is Wall Street's turn to rebuild the middle class by paying a modest financial transactions tax. The Tax on Wall Street Speculation Act will curb the excessive greed of Wall Street and provide more than enough revenue to make public colleges and universities tuition free for working families.”
“National Nurses United applauds Congresswoman Barbara Lee and Senator Bernie Sanders for reintroducing the Tax on Wall Street Speculation Act,” said Jean Ross, RN, President, National Nurses United. “Through establishing a small financial transaction tax, this legislation would raise up to $220 billion a year in new revenue, which would then be used to fund critical programs and services in health care, education, housing, and environmental protection. Nurses see the effects of poverty and economic inequality at the hospital bedside every day, and we know that our country is in dire need of investments into critical social programs that will improve the lives of our patients. After the devastation caused by the Covid-19 pandemic, this legislation is even more important. NNU strongly supports the Tax on Wall Street Speculation Act and encourages every member of Congress to join us in supporting this bill.”
“Americans are simply fed up with Wall Street’s profits reaching sky-high levels while so many families are struggling to pay rent and put food on the table,” said Susan Harley, managing director of Public Citizen’s Congress Watch division. “The Tax on Wall Street Speculation Act would begin to tackle the ever-widening income inequality gap while simultaneously discouraging the sorts of rampant speculation that takes place in our markets, especially through high-frequency trading. A tax of only a fraction of a percent on trades has the potential to bring in nearly $220 billion in just its first year—revenues that are much needed for investments in public education, expanded health care, clean energy and other priorities that will grow jobs in communities. We thank Sen. Sanders and Congresswoman Lee for their leadership on this topic.”
“In the interest of ensuring that financial markets are not unduly impacted by special interest and arbitrage, it is imperative that financial transactions be held to the same standard as any other marketplace transaction. Transaction and sales tax are used in many marketplaces to curb wholesale arbitrage and monopsony, without which pricing is more easily artificially inflated and speculative and can prevent responsible investors and traders from accessing fair pricing. Main Street investors have enormous potential in the marketplace to drive their investments into long-term real economy projects and solutions, and without their ability to compete freely, investors, business owners and consumers are unfairly burdened. The American Sustainable Business Council thanks Senator Sanders and Representative Lee for re- introducing this bill and looks forward to advocating its passage for the benefit of our members, their customers and all of our stakeholders.” — Jeffrey Hollender CEO, American Sustainable Business Council and co-founder of Seventh Generation
The legislation sets different rates on stocks, bonds, and derivatives based on the existing transaction costs in each market—0.5 percent for stocks, 0.1 percent for bonds, and 0.005 percent for derivatives. This more targeted approach roughly equalizes the increase in transaction costs across securities due to the tax and thus reduces the economic distortions and tax avoidance possibilities created by it. This bill targets Wall Street investment houses, hedge funds, and other speculators. For the rare household of modest means that trades directly or through a broker, this legislation would provide an income tax credit to fully offset the speculation fee.
Lee’s House companion was introduced with original cosponsors Reps. Holmes Norton (D-?District of Columbia), Pingree (D-Maine), Garcia (D-IL), Cohen (D-Tenn.), Chu (D-CA), Jones (D-NY), Jayapal (D-Calif.), Omar (D-Minn.), Grijalva (D-Ariz.), Garamendi (D-Calif.).
A letter from endorsing organizations is available here.
For the full text of the bill, click here.