Senate Democrats reintroduce bill to create financial transaction tax

A group of Democratic senators on Thursday reintroduced legislation to create a financial transaction tax, arguing that such a tax would help to reduce economic inequality.

The bill would establish a tax of 0.1 percent on the sales of stocks, bonds and derivatives. Its reintroduction comes as stocks have seen record highs in recent weeks even as many families continue to face economic challenges as a result of the coronavirus pandemic.

“During the pandemic, Wall Street has cashed in on high-risk trades that add no real value to our economy and leave working families behind. We need to curb this dangerous trading to reduce volatility in the markets and encourage investment that can actually help our economy grow,” Sen. Brian Schatz (D-Hawaii), the lead sponsor of the bill, said in a statement. “By raising the price of financial transactions, we can make our financial system work better while bringing in billions in new revenue that we can reinvest in our workers and our communities.”

The bill is co-sponsored by several other Democrats, including Sens. Elizabeth Warren (D-Mass.) and Chris Van Hollen (D-Md.). It also has the support of a number of labor unions. Rep. Peter DeFazio (D-Ore.) reintroduced a version of the bill in the House in January.

Legislation to create a financial transaction tax faces obstacles for passage. Republicans and business groups are opposed to this type of tax, arguing that it would hurt people saving for their retirements.

Treasury Secretary Janet Yellen, a key member of President Biden’s economic team, said last month that there is a need to examine how a financial transaction tax would impact retail investors.

“It could deter speculation, but it might also have negative impacts,” Yellen said at a virtual event hosted by The New York Times.