House Bill Would Tax Securities Transactions to Pay for TARP

A House bill would impose a securities transfer tax to pay for the cost of the troubled asset relief program (TARP). The Let Wall Street Pay for Wall Street's Bailout Act of 2009 (HR 1068) would add a new Section 4475 to the Internal Revenue Code to impose a tax on each covered securities transaction in an amount equal to the applicable percentage of the value of the security involved in the transaction. The tax would be paid by the trading facility on which the transaction occurs. The transfer tax would be broadly applied to the sale and purchase of financial instruments such as stock, options, and futures. Treasury must implement the tax in consultation with the SEC and CFTC.

The tax on each covered securities transaction would be an amount equal to the applicable percentage of the value of the security involved in such transaction. The bill defines applicable percentage to mean the lesser of the specified percentage or 0.25 percent. In turn, specified percentage is defined to mean the percentage that Treasury estimates would result in the aggregate revenue equal to the net cost of carrying out the TARP.