By Marc Heller
The White House has been cool to a new tax on financial transactions, but a Democratic lawmaker proposing to introduce one has not given up on the Obama administration.
Rep. Keith Ellison (D-Minn.) told BNA April 17 that he believes Treasury Secretary Jacob J. Lew may yet come around to the view that a tax on sales of stock, bonds, and derivatives makes sense as a way to raise revenue and combat distortions in the financial markets.
“I'm going to put him in the category of not having him on board--yet,” Ellison said after a news conference announcing that he has introduced a bill to establish a financial transactions tax.
Ellison's bill, the Inclusive Prosperity Act (H.R. 1579), follows legislation introduced in February by Rep. Pete DeFazio (D-Ore.) and Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), but differs in some respects.
“We've just got to be persistent,” Ellison told BNA.
That approach varies from the legislation backed by DeFazio, Harkin, and Whitehouse, which would tax all of the transactions at a 0.03 percent rate and include an offset for contributions to retirement plans, medical plans and savings accounts.
Supporters--including nonprofit groups advocating for more funding for health programs--said at the April 17 news conference that the tax would generate $300 billion a year for various programs, while curbing the frequent, nearly instantaneous financial trades that critics say are distorting the financial markets.
Financial instruments in such trades are held for only seconds and cause the markets to oscillate around what the true market value should be, said Wallace Turbeville, senior fellow at Demos, a liberal think tank, and former Goldman Sachs investment banker.
But in private, Lew has appeared more open than his predecessor to considering the idea, Harkin has said.
The Congressional Budget Office has said a financial transaction tax would probably reduce output and employment, and could diminish the importance of the United States as a major financial market--an assessment the Heritage Foundation, a conservative think tank, embraced in an article on its website.
“These are not minor considerations in an economy that is still recovering. The U.S. financial industry dominates those of most other nations, but it has been feeling competitive pressure from other areas,” Heritage Foundation analysts Curtis Dubay and David C. John wrote Feb. 28.
“As the CBO says, a financial transactions tax would drive major portions of the industry overseas, including the part that conducts high-volume trading,” the analysts said. “This would diminish the importance of the U.S. as a financial center and greatly reduce the economic benefits that come with it. Among other things, thousands of high-paying jobs would leave the U.S., sharply reducing employment at hundreds of non-financial companies that depend on these customers.”
By Marc Heller
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)