Protecting Retirement Savers and Everyday Investors Act

I 116TH CONGRESS 2D SESSION H. R. 8695 To impose a limitation on taxation and fees on transactions by certain securities industry participants, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 27, 2020 Mr. MCHENRY (for himself and Mr. HUIZENGA) introduced the following bill; which was referred to the Committee on the Judiciary A BILL To impose a limitation on taxation and fees on transactions by certain securities industry participants, and for other purposes. 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 ‘‘Protecting Retirement 4 Savers and Everyday Investors Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 (1) The United States capital markets are so- 8 phisticated, complex, diverse, and highly inter- 9 connected interstate marketplaces that effect and 10 VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 8695 IH process millions of trades daily for the benefit of in- 1 dividual and institutional investors throughout the 2 United States, including the retirement accounts of 3 union members, pensioners, teachers, policemen, 4 firemen, first responders, and other working Ameri- 5 cans, as well as the endowments of colleges and uni- 6 versities and charitable organizations. 7 (2) The United States capital markets are the 8 deepest, most liquid markets in the world in large 9 measure because of the low transaction costs that in- 10 vestors pay to trade securities. 11 (3) Under the Federal securities laws, the Secu- 12 rities and Exchange Commission serves as the pri- 13 mary supervisor and regulator of the United States 14 capital markets (with the assistance of other Federal 15 regulators), while under State securities laws, State 16 regulators serve a secondary function of helping to 17 protect investors with respect to securities offered 18 and sold within their States. 19 (4) Also pursuant to the Federal securities 20 laws, Congress directs the Securities and Exchange 21 Commission to assess transaction fees upon the 22 United States capital markets that are designed to 23 recover the Commission’s costs of supervising and 24 regulating the United States capital markets. 25 VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 8695 IH (5) Some States have proposed taxes and fees 1 that are based on securities transactions and proc- 2 essing activity related thereto from investors from 3 other States and would raise costs for all United 4 States investors, even investors outside of the States 5 levying the taxes and fees. 6 SEC. 3. LIMITATION ON TAXATION AND FEES ON TRANS- 7 ACTIONS BY CERTAIN SECURITIES INDUSTRY 8 PARTICIPANTS. 9 (a) IN GENERAL.—The Dodd-Frank Wall Street Re- 10 form and Consumer Protection Act is amended by adding 11 at the end the following new title: 12 ‘‘TITLE XVII—LIMITATION ON 13 TAXATION AND FEES ON 14 TRANSACTIONS BY CERTAIN 15 SECURITIES INDUSTRY PAR- 16 TICIPANTS 17 ‘‘SEC. 1701. LIMITATION. 18 ‘‘(a) IN GENERAL.—No State or political subdivision 19 thereof may impose a direct or indirect tax upon a securi- 20 ties industry participant where that tax is based upon— 21 ‘‘(1) the number or volume of securities trans- 22 actions that the securities industry participant con- 23 summates or processes, in whole or in part, within 24 that State or political subdivision or by utilizing per- 25 VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 8695 IH sonnel, resources, systems, facilities, vendors, tech- 1 nology, or infrastructure that are located in or that 2 traverse that State or political subdivision; or 3 ‘‘(2) the value of such securities transactions. 4 ‘‘(b) PRESERVATION OF STATE AND LOCAL TAXING 5 AUTHORITY.—Except as provided in this section, nothing 6 in this title shall be construed to modify, impair, or super- 7 sede, or authorize the modification, impairment, or super- 8 seding of, any State or local law pertaining to taxation 9 that is otherwise permissible by or under the Constitution 10 of the United States or other Federal law and in effect 11 on the date of enactment of this Act. 12 ‘‘(c) EXCEPTION.— 13 ‘‘(1) IN GENERAL.—Individual States may im- 14 pose taxes and collections of those taxes on covered 15 persons for transactions, which may have occurred 16 within the national market system, to buy or sell se- 17 curities of their own accord. 18 ‘‘(2) COVERED PERSON DEFINED.—For pur- 19 poses of paragraph (1) and with respect to a State, 20 the term ‘covered person’ means— 21 ‘‘(A) an individual with primary residence 22 and domicile in that State; and 23 ‘‘(B) businesses, corporations, and other 24 entities that— 25 VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 8695 IH ‘‘(i) are not part of the national mar- 1 ket system; and 2 ‘‘(ii) are domiciled in and subject to 3 that State’s legal requirements. 4 ‘‘(d) DEFINITIONS.—For purposes of this section: 5 ‘‘(1) ALTERNATIVE TRADING SYSTEM.—The 6 term ‘alternative trading system’ shall have the 7 meaning set forth in section 242.300 of title 17, 8 Code of Federal Regulations. 9 ‘‘(2) COMMODITY.—The term ‘commodity’ shall 10 have the meaning set forth in section 1a of the Com- 11 modity Exchange Act (7 U.S.C. 1a(9)). 12 ‘‘(3) NATIONAL SECURITIES EXCHANGE.—The 13 term ‘national securities exchange’ shall have the 14 meaning given such term under section 6 of the Se- 15 curities Exchange Act of 1934 (15 U.S.C. 78f(a)). 16 ‘‘(4) PROCESS.—The term ‘process’ shall in- 17 clude all activities involved directly or indirectly in 18 effectuating a securities transaction, including enter- 19 ing, transmitting, routing, matching, and executing 20 orders in securities, as well as clearing, settling, re- 21 porting, and consolidation and dissemination of data 22 and any other incidental activity relating to securi- 23 ties transactions, including to the maintenance and 24 VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 8695 IH operation of backup and disaster recovery facilities 1 and systems. 2 ‘‘(5) SECURITIES INDUSTRY PARTICIPANT.— 3 The term ‘securities industry participant’ means a 4 federally regulated self-regulatory organization, na- 5 tional securities exchange, alternative trading sys- 6 tem, securities information processor, commodities 7 exchange, clearing agency, trade reporting facility, 8 broker, dealer, or securities trading system or plat- 9 form owned or operated by a broker or dealer. 10 ‘‘(6) SECURITIES TRANSACTION.—The term ‘se- 11 curities transaction’ means the purchase or sale of 12 a security. 13 ‘‘(7) OTHER SECURITIES DEFINITIONS.—The 14 terms ‘broker’, ‘clearing agency’, ‘dealer’, ‘exchange’, 15 ‘securities information processor’, ‘security’, and 16 ‘self-regulatory organization’ shall have the mean- 17 ings given those terms, respectively, under section 18 3(a) of the Securities Exchange Act of 1934 (15 19 U.S.C. 78c(a)).’’. 20 (b) CLERICAL AMENDMENT.—The table of contents 21 under section 1(b) of the Dodd-Frank Wall Street Reform 22 and Consumer Protection Act is amended by adding at 23 the end the following: 24 VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 8695 IH ‘‘TITLE XVII—LIMITATION ON TAXATION AND FEES ON TRANS- ACTIONS BY CERTAIN SECURITIES INDUSTRY PAR- TICIPANTS. ‘‘Sec. 1701. Limitation.’’. Æ VerDate Sep 11 2014 19:29 Nov 17, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H8695.IH H8695 pamtmann on DSKBC07HB2PROD with BILLS