Congress

Financial transaction tax will be a test for Democratic presidential candidates

Questions will be asked about whether others will join New York’s Gillibrand in support

Rep. Peter A. DeFazio, D-Ore., is leading the House version of a proposed trading tax. (Tom Williams/CQ Roll Call file photo)

The many congressional Democrats making runs for the White House will have to decide whether to support a new tax on traders and investors.

With Democrats on both sides of the Capitol unveiling proposed taxes on financial transactions that they say would target high frequency trading while providing new revenue for Democratic priorities, the issue could put several candidates on the record. 

Rep. Peter A. DeFazio of Oregon, who is the lead sponsor in the House, referred directly to the possibility of the potential $777 billion in tax receipts over a decade being used for spending.

“Congress needs to rein in excessive speculative activity and protect working families from these dangerous practices while maintaining appropriate market liquidity,” DeFazio said. “This legislation will curb unnecessary speculation and generate much-needed revenue to help the federal government fund national priorities and invest in the real economy to benefit all Americans.”

The co-sponsors include a 2020 Democratic presidential hopeful whose current constituency includes Wall Street.

“More than a decade after Wall Street greed brought the American economy to its knees, big banks and the richest Americans are doing just fine, yet Main Streets and hardworking New Yorkers all over our state are still struggling,” New York Sen. Kirsten Gillibrand said in a statement. “Congress needs to do everything it can to prevent another financial crisis, and this bill would update the rules for Wall Street, help prevent systemic risk in our financial system, and raise revenue so we can invest in our economy.”

With Gillibrand on board, the other Democrats running for president from the Senate are sure to face questions about whether they will sign-on to the proposal.

The lead sponsor on the Senate version of the bill is Hawaii Sen. Brian Schatz, who emphasized that the new tax could help reduce the incentives for volatile trading.

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