Praising
the recent approval of a financial transaction tax for eleven E.U. countries by
the Council of Economic and Finance Ministers, Senator Tom Harkin (D-Iowa)
plans to reintroduce in the 113th Congress legislation to impose a
financial transaction tax in the U.S. In the 112th
Congress, Senator Harkin introduced the Wall Street Trading and Speculators Tax
Act, S. 1787, which would have applied a three basis point tax or three cents
on every $100 financial transaction. The EU financial transaction tax allows
for a ten basis point tax on stock transactions and a one basis point tax for
derivatives transactions. Rep. Peter DeFazio
(D-OR) will introduce a companion bill in the House.
Financial Transaction Tax. Under the Harkin
legislation, for the tax to apply the purchase of the security must occur on a
trading facility located in the U.S.
and the purchaser or seller must be a U.S. person. The bill would exempt
initial issues of securities and securities traded pursuant to certain lending
arrangements. There will also be an exemption for retirement and education
savings. The Act broadly defines ``derivative instrument’’ to include any
option, forward contract, futures contract or any similar financial instrument.
According
to Senator Harkin, the Congressional Joint Tax Committee scored their
proposal as raising $352 billion over 10 years in the last Congress. The
lawmakers will reintroduce their measure in the coming weeks.