At a time when tax cuts are being touted by many politicians, Iowa Senator Tom Harkin says he’s co-sponsoring a bill that would bring about a tax increase. Harkin wants to place a fee on all stock market trades, targeting the type of automated trading that some blame for the mess on Wall Street in recent years.
Harkin says his measure in the Senate mirrors one Iowa Congressman Bruce Braley introduced last week in the House. “Our bills would place a tax of three basis points, in other words, three pennies on a hundred-dollars in value, on most non-consumer financial trading including stocks, bonds, options and derivative contracts,” Harkin says.
“By setting the tax rate at this number of basis points, the measure is not likely to impact a decision to engage in productive economic activity.” Harkin, a Democrat, says many other countries, including Great Britain, have similar taxes in place already.
“Until 1966, the United States taxed all stock transactions and transfers,” Harkin says. “Indeed, Congress doubled the transaction tax rate during the Great Depression in order to finance economic recovery initiatives such as public works projects.” Supporters say the legislation, called the “Wall Street Speculation Fee Bill,” could raise billions of dollars for the U.S. Treasury, though an average family would only pay one dollar more a year for its stock trades.
“Let me put it bluntly,” Harkin says. “We need the new revenue that would be generated by this tax in order to reduce deficits and maintain critical investments in education, infrastructure and job creation and there’s no question that Wall Street can easily bear this tax.”
Braley, a Democrat from Waterloo, says the majority of stock trades are not being made by people, but by computers that can sell thousands of securities in the blink of an eye. The fee would target that type of trading.