Tax on Wall Street Speculation Act

II 117TH CONGRESS 1ST SESSION S. 1283 To impose a tax on certain trading transactions to invest in our families and communities, improve our infrastructure and our environment, strengthen our financial security, expand opportunity and reduce market volatility. IN THE SENATE OF THE UNITED STATES APRIL 21, 2021 Mr. SANDERS (for himself and Mrs. GILLIBRAND) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To impose a tax on certain trading transactions to invest in our families and communities, improve our infrastruc- ture and our environment, strengthen our financial secu- rity, expand opportunity and reduce market volatility. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Tax on Wall Street 4 Speculation Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1283 IS (1) The global financial crisis cost Americans 1 $19 trillion in lost wealth. 2 (2) The global financial crisis was caused by fi- 3 nancial firms taking great financial risks without 4 disclosing those risks to their investors or their regu- 5 lators, and by regulatory failures to adequately po- 6 lice the financial services markets for crime, unfair 7 or deceptive practices, fraud, lack of transparency, 8 and mismanagement. 9 (3) Deceptive, illegal, and speculative financial 10 practices have harmed public confidence in the integ- 11 rity and fairness of many United States financial in- 12 stitutions, and threaten the basic strengths of the 13 United States economic system. 14 (4) American citizens provided the money to 15 stabilize the financial sector, making $700 billion 16 available to 800 financial institutions, automakers, 17 and insurance companies. 18 (5) The global financial crisis, along with the 19 wars, unabated and unaddressed climate change, 20 unsustainable tax cuts, and a continuing unemploy- 21 ment crisis, if unaddressed, will deprive a generation 22 of a meaningful role in the larger economy. 23 (6) Nurses, teachers, public safety officers, and 24 other public sector workers have faced drastic fund- 25 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1283 IS ing cuts, harming our long-term public safety and 1 prospects for economic growth. 2 (7) Extreme weather events rooted in climate 3 change, including flood, drought, fire, super storms 4 like Sandy, as well as ‘‘slow-onset’’ events like sea 5 level rise, are wreaking havoc in the United States 6 and across the globe resulting in climate change im- 7 pacts that jeopardize the lives and livelihoods of 8 Americans, causing large-scale food and energy inse- 9 curity in developing countries, and extolling untold 10 economic costs. 11 (8) According to economists, a small tax on 12 transfer of ownership of every financial trade could 13 generate hundreds of billions annually in revenue, 14 which when invested could help create millions of 15 good-paying jobs in both the public and private sec- 16 tors every year, as well as provide urgently needed 17 funding for programs to combat climate change and 18 address global health and development issues. 19 (9) A transactions tax will help limit high fre- 20 quency trading which may be as high as 70 percent 21 of the market and results in declining market sta- 22 bility through extreme price volatility, distorted mar- 23 ket prices, and structural vulnerability to speculation 24 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1283 IS far in excess of the liquidity needs of commercial 1 hedgers. 2 (10) A securities transfer tax would have a neg- 3 ligible impact on the average investor. 4 (11) The United States had a transfer tax from 5 1914 to 1966: The Revenue Act of 1914 (Act of 6 Oct. 22, 1914 (ch. 331, 38 Stat. 745)) levied a 0.02 7 percent tax on all sales or transfers of stock which 8 was doubled in 1932 to help overcome the budgetary 9 challenges during the Great Depression. 10 (12) Forty nations have or have had some form 11 of a financial transactions tax; it is endorsed by 12 more than 1,000 economists; and 10 European 13 countries are moving forward on implementing a co- 14 ordinated financial transactions tax after European 15 Union finance ministers signaled approval in Janu- 16 ary 2013. 17 (13) Revenue generated by this tax could be 18 available to— 19 (A) create a more dynamic economy and 20 enhance economic opportunity by providing free 21 college education and lessening student debt; 22 (B) strengthen financial security and ex- 23 pand opportunity for low- and moderate-income 24 families, including strengthening the social safe- 25 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1283 IS ty net and expanding resources for child care, 1 Social Security, and savings incentives; 2 (C) expand resources for State and Fed- 3 eral investments that protect our health and en- 4 vironment, investing in water and wastewater 5 infrastructure, rebuild our crumbling physical 6 infrastructure, and create good paying jobs 7 by— 8 (i) expanding and improving Medicare 9 and Medicaid; 10 (ii) investing in job training, public 11 sector jobs, and green jobs; 12 (iii) providing housing assistance to 13 low-income households; 14 (iv) investing in transportation includ- 15 ing public mass transit and an infrastruc- 16 ture bank that promotes environmentally 17 responsible domestic manufacturing and 18 construction industries; and 19 (v) protecting our environment and 20 building a clean energy economy, including 21 efforts to combat climate change and build 22 resilience to its effects in the United States 23 and in developing countries; and 24 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1283 IS (D) fund international sustainable pros- 1 perity programs such as HIV treatment, re- 2 search and prevention programs, other inter- 3 national health and humanitarian assistance, 4 and climate change adaptation and mitigation 5 efforts by developing countries. 6 SEC. 3. TRANSACTION TAX. 7 (a) IN GENERAL.—Chapter 36 of the Internal Rev- 8 enue Code of 1986 is amended by inserting after sub- 9 chapter B the following new subchapter: 10 ‘‘Subchapter C—Tax on Trading Transactions 11 ‘‘Sec. 4475. Tax on trading transactions. ‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 12 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 13 a tax on the transfer of ownership in each covered trans- 14 action with respect to any security. 15 ‘‘(b) RATE OF TAX.—The tax imposed under sub- 16 section (a) with respect to any covered transaction shall 17 be the applicable percentage of the specified base amount 18 with respect to such covered transaction. The applicable 19 percentage shall be— 20 ‘‘(1) 0.5 percent in the case of a security de- 21 scribed in subparagraph (A) or (B) of subsection 22 (e)(1), 23 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1283 IS ‘‘(2) 0.10 percent in the case of a security de- 1 scribed in subparagraph (C) of such subsection, and 2 ‘‘(3) 0.005 percent in the case of a security de- 3 scribed in subparagraph (D) of such subsection. 4 ‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 5 this section, the term ‘specified base amount’ means— 6 ‘‘(1) except as provided in paragraph (2)— 7 ‘‘(A) in the case of any security described 8 in subparagraph (A), (B), or (C) of subsection 9 (e)(1), the fair market value of the security (de- 10 termined as of the time of the covered trans- 11 action), and 12 ‘‘(B) in the case of any security described 13 in subparagraph (D) of such subsection, the 14 fair market value of the underlying investment 15 with respect to such security (determined as of 16 the time of the covered transaction), and 17 ‘‘(2) in the case of any payment described in 18 subsection (h), the amount of such payment. 19 ‘‘(d) COVERED TRANSACTION.—For purposes of this 20 section, the term ‘covered transaction’ means— 21 ‘‘(1) except as provided in paragraph (2), any 22 purchase if— 23 ‘‘(A) such purchase occurs or is cleared on 24 a facility located in the United States, or 25 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1283 IS ‘‘(B) the purchaser or seller is a United 1 States person, and 2 ‘‘(2) any transaction with respect to a security 3 described in subparagraph (D) of subsection (e)(1), 4 if— 5 ‘‘(A) such security is traded or cleared on 6 a facility located in the United States, or 7 ‘‘(B) any party with rights under such se- 8 curity is a United States person. 9 ‘‘(e) SECURITY AND OTHER DEFINITIONS.—For pur- 10 poses of this section— 11 ‘‘(1) SECURITY.—The term ‘security’ means— 12 ‘‘(A) any share of stock in a corporation, 13 ‘‘(B) any partnership or beneficial owner- 14 ship interest in a partnership or trust, 15 ‘‘(C) any note, bond, debenture, or other 16 evidence of indebtedness, other than a State or 17 local bond the interest of which is excluded 18 from gross income under section 103(a), or 19 ‘‘(D) any derivative. 20 ‘‘(2) DERIVATIVE.—The term ‘derivative’ 21 means any contract (including any option, forward 22 contract, futures contract, short position, swap, or 23 similar contract) the value of which, or any payment 24 or other transfer with respect to which, is (directly 25 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1283 IS or indirectly) determined by reference to one or 1 more of the following: 2 ‘‘(A) Any share of stock in a corporation. 3 ‘‘(B) Any partnership or beneficial owner- 4 ship interest in a partnership or trust. 5 ‘‘(C) Any evidence of indebtedness. 6 ‘‘(D) Any real property. 7 ‘‘(E) Any commodity which is actively 8 traded (within the meaning of section 9 1092(c)(4)). 10 ‘‘(F) Any currency. 11 ‘‘(G) Any rate, price, amount, index, for- 12 mula, or algorithm. 13 ‘‘(H) Any other item as the Secretary may 14 prescribe. 15 Except as provided in regulations prescribed by the 16 Secretary to prevent the avoidance of the purposes 17 of this section, such term shall not include any item 18 described in subparagraphs (A) through (H). 19 ‘‘(3) UNDERLYING INVESTMENT.—The term 20 ‘underlying investment’ means, with respect to any 21 derivative, any item— 22 ‘‘(A) which is described in any of the sub- 23 paragraphs (A) through (H) of paragraph (2) 24 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1283 IS (or any item substantially the same as any such 1 item), and 2 ‘‘(B) by reference to which the value of the 3 derivative, or any payment or other transfer 4 with respect to the derivative, is determined ei- 5 ther directly or indirectly. 6 ‘‘(4) TREATMENT OF EXCHANGES.— 7 ‘‘(A) IN GENERAL.—An exchange shall be 8 treated as the sale of the property transferred 9 and a purchase of the property received by each 10 party to the exchange. 11 ‘‘(B) CERTAIN DEEMED EXCHANGES.—In 12 the case of a distribution treated as an ex- 13 change for stock under section 302 or 331, the 14 corporation making such distribution shall be 15 treated as having purchased such stock for pur- 16 poses of this section. 17 ‘‘(f) EXCEPTIONS.— 18 ‘‘(1) EXCEPTION FOR INITIAL ISSUES.—No tax 19 shall be imposed under subsection (a) on any cov- 20 ered transaction with respect to the initial issuance 21 of any security described in subparagraph (A), (B), 22 or (C) of subsection (e)(1). 23 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1283 IS ‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT- 1 TERM INDEBTEDNESS.—A note, bond, debenture, or 2 other evidence of indebtedness which— 3 ‘‘(A) is traded on a trading facility located 4 in the United States, and 5 ‘‘(B) has a fixed maturity of not more 6 than 60 days, 7 shall not be treated as described in subsection 8 (e)(1)(C). 9 ‘‘(3) EXCEPTION FOR SECURITIES LENDING AR- 10 RANGEMENTS.—No tax shall be imposed under sub- 11 section (a) on any covered transaction with respect 12 to which gain or loss is not recognized by reason of 13 section 1058. 14 ‘‘(g) BY WHOM PAID.— 15 ‘‘(1) IN GENERAL.—The tax imposed by this 16 section shall be paid by— 17 ‘‘(A) in the case of a transaction which oc- 18 curs or is cleared on a facility located in the 19 United States, such facility, and 20 ‘‘(B) in the case of a purchase not de- 21 scribed in subparagraph (A) which is executed 22 by a broker (as defined in section 6045(c)(1)), 23 the broker. 24 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 12 •S 1283 IS ‘‘(2) SPECIAL RULES FOR DIRECT, ETC., 1 TRANSACTIONS.—In the case of any transaction to 2 which paragraph (1) does not apply, the tax imposed 3 by this section shall be paid by— 4 ‘‘(A) in the case of a transaction described 5 in subsection (d)(1)— 6 ‘‘(i) the purchaser if the purchaser is 7 a United States person, and 8 ‘‘(ii) the seller if the purchaser is not 9 a United States person, and 10 ‘‘(B) in the case of a transaction described 11 in subsection (d)(2)— 12 ‘‘(i) the payor if the payor is a United 13 States person, and 14 ‘‘(ii) the payee if the payor is not a 15 United States person. 16 ‘‘(h) CERTAIN PAYMENTS TREATED AS SEPARATE 17 TRANSACTIONS.—Except as otherwise provided by the 18 Secretary, any payment with respect to a security de- 19 scribed in subparagraph (D) of subsection (e)(1) shall be 20 treated as a separate transaction for purposes of this sec- 21 tion, including— 22 ‘‘(1) any net initial payment, net final or termi- 23 nating payment, or net periodical payment with re- 24 VerDate Sep 11 2014 04:44 May 19, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1283.IS S1283 kjohnson on DSK79L0C42PROD with BILLS 13 •S 1283 IS spect to a notional principal [Text truncated for display. 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