- The Washington Times - Wednesday, November 2, 2011

Touting it as a way to curb financial speculation and funnel Wall Street profits to Main Street businesses, Democratic lawmakers on Capitol Hill introduced Wednesday a bill to tax trading activity by investment banks and financial firms.

Financial industry lobbies immediately attacked the proposal, warning it would harm the competitiveness of the U.S. capital markets. But the idea, which has also been pushed by some European leaders, is likely to get an airing at the Group of 20 economic summit that begins Thursday in France.

Congressional Democrats said the Wall Street Trading and Speculators Tax Act would impose a 0.03 percent tax on the value of each transaction and financial trade. So for every $100, traders would pay 3 cents.

The tax on trading in stocks and bonds is a way of punishing speculators without harming small, individual traders, they said. The bill would also cover derivative contracts, options and swaps, and backers claim it could bring in $100 billion a year to the federal Treasury.

“We think it’s about making Wall Street pay for the recovery on Main Street,” said Rep. Bruce L. Braley, Iowa Democrat, and a co-sponsor of the House bill.

Thirty countries around the world already impose similar taxes, and bill co-sponsor Rep. Peter A. DeFazio, Oregon Democrat, predicted the idea would get serious consideration at the G-20 gathering. French President Nicolas Sarkozy has been a major supporter of the idea.

“The first step on the long path to recovery happens when we rein in the excessive speculative activity that has destabilized our financial system,” he said.

With London one of the world’s major financial centers, the British government has opposed a European Union proposal for a financial transaction tax, which would impose a 0.1 percent charge on stock and bond trade and 0.01 percent on derivative contracts. But the idea got support from a surprising source Wednesday: Archbishop of Canterbury Rowan Williams.

In an opinion piece in the Financial Times, the spiritual head of the world’s Anglicans said global leaders should reconsider the transaction tax to meet the concerns of the Occupy Wall Street protesters who have now set up camp in New York, London and cities around the globe.

But Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, warned that the tax would reduce the number of trades, and fewer trades meant more volatility in the market.

While financial groups have said the tax would push business away from Wall Street to foreign rivals, Sen. Tom Harkin, Iowa Democrat and a co-sponsor of the tax bill, said he didn’t believe it.

“They’re going to move to another country to save three bucks on $10,000 of trades?” he asked. “I don’t think so.”

But Mr. Talbott said no investors, whether from Wall Street or Main Street, wants to lose any more money in the markets.

“Every penny counts,” Mr. Talbott said, “and over time those pennies will add up.

“It will hurt parents saving for college tuition,” he added. “It will hurt graduates saving for a new home. It will hurt the elderly who are saving for retirement. It will hurt Americans in all walks of life.”

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