Braley, Harkin, House Populists push for Wall Street transaction fees

Members of the House Populist Caucus, chaired by Representative Bruce Braley (IA-01), held a press conference on Thursday to endorse a bill that would “assess a small fee on Wall Street day traders to pay down the national deficit and invest in America’s middle class families.”

Details about the bill are after the jump.

From a press release Braley’s office issued on December 3:

“One of the founding principles of the Populist Caucus is to fight for working families by creating and retaining good paying jobs,” Braley said. “For the past eight years, our economic policies have put the interests of Wall Street ahead of the interests of  Main Street Americans. The reasons we introduced the Wall Street transaction tax today is because we need to get our economy working again for Middle Class families.  That’s who we’re fighting for every day and that is who our federal government should be fighting for.”

“Our nation continues to be crippled by a struggling economy which has resulted in an astronomical unemployment rate of 10.2 percent,” [Representative Peter] DeFazio [OR-04] said.  “The American taxpayers bailed out Wall Street during a crisis brought on by reckless speculation in the financial markets.  This legislation will force Wall Street to do their part and put people displaced by that crisis back to work.” […]

The legislation will assess a small securities fee on the following transactions:

·         Stock transactions (tax rate will be 1/4 of 1 percent–0.25%),

·         Futures contracts to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (tax rate will be 0.02%),

·         Swaps between two firms on certain benefits of one party’s financial instrument for those of the other party’s financial instrument (tax rate will be 0.02%)

·         Credit default swaps where a contract is swapped through a series of payments in exchange for a payoff if a credit instrument (typically a bond or loan) goes into default (fails to pay) (tax rate will be 0.02%),

·         And options, which are contracts between a buyer and a seller that gives the buyer the right, but not the obligation, to buy or to sell a particular asset on or before the option’s expiration time, at an agreed price (at the rate of the underlying asset).

To ensure the tax is appropriately targeted to speculators and has no impact on the average investor and pension funds, the tax will be refunded for:

1)      tax-favored retirement accounts,

2)      education savings accounts,

3)      health savings accounts,

4)      mutual funds and,

5)      the first $100,000 of transactions annually that are not already exempted.

Braley spokeswoman Caitlin Legacki told me that as of this morning, the bill has 21 co-sponsors, 14 of whom belong to the Populist Caucus.

The bill has at least one champion in the Senate. HELP Committee Chairman Tom Harkin appeared with Populist Caucus members at yesterday’s press conference. I don’t know whether any Democrat on the Senate Finance Committee is willing to push for this measure.

I haven’t seen any reaction yet from the Obama administration. Supporting this bill should be an easy call, but my hunch is that Treasury Secretary Timothy Geithner and senior presidential adviser Larry Summers will have Wall Street’s back on this one. Here’s hoping I am wrong about that.

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  • bad idea, bad for the economy.......

    Care to ask real people in Iowa if they want their taxes raised at this point?  What about NO are people not understanding…..???

    Not only this, but extra taxes on investment in our economy hurts our savings rate, reduces investment, and slows economic activity.

    Bad policy.

    • the first $100,000 of transactions annually

      are not taxed. I would say most Iowans are not going to be affected.

      Major Wall Street trading firms are making a killing. It’s time for them to make a minimal sacrifice for the greater good.

      • Why are we always so eager to tax "the other guy"?

        Yes, at first blush it appears that the tax affects only the evil trading firms that “are making a killing”.  However, I’m sure that my 401K company will be affected and I’m also sure that my IPERS fund will be affected as well.  Tell me, who eventually pays those fees in the end?  We both know the answer to that.

        • Well, one of us knows the answer to that.

          I know you say you’re sure, but your retirement benefit funds wouldn’t be affected by the tax, IowaBorn – the press release states that quite clearly. Wealthy stock speculators will be the ones hit the most, which is actually a good thing for your 401k and IPERS accounts, as short selling and other high-speed financial transactions are core causes of market instability.

          • Okay -- To a lesser degree

            It does say that the retirement accounts will have the tax REFUNDED.  So there will not be a tax paid as such, only the increased expense of paying the tax and subsequently applying for the refund will be paid by the contributing members.