Dems Propose New Tax On Stocks And Bond Trades

By Lisa Kellman

Sen. Tom Harkin (D-Iowa) and Rep. Peter Defazio (D-Ore.) introduced companion bills Wednesday that would prevent high-frequency trades on Wall Street.

The legislation would place a .03 percent tax on non-consumer financial trades; including bonds, stocks and debts.

“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 education,” said Harkin.

Democrats believe the legislation will not adversely affect Wall Street and argue that it would get the economy back on track by helping reduce the nation’s deficit.

“It starts with getting rid of some of the most agregious and unproductive and volatile of these super high-volume quantitatively driven traders,” argued Defazio.

This act is a simplified version of another speculation tax bill that failed to pass congress in 2007. In an effor to garner bipartisan support, Democrats have reduced the percentage taxed to one tenth of the tax rate previously proposed.

The UK, Australia, Argentina, China  and other countries already have a similar speculation tax, and the EU is currently debating implementing its own.

In the past, members of Congress, primarily Republicans, have argued that companies would move overseas to avoid the added speculation tax. However, because many robust economies now have a simlar tax, the Democrats believe the fears are unfounded.

“They’d have to give up their U.S citizenship to avoid the tax,” argued DeFazio.

Although a detailed analysis of the bills that indicate the amount of new revenues they would yeild, proponents of the plan believe it would add nearly $100 billion annually.