Tax Wall Street to Restore Main Street

Editor's Note: Yesterday, Rep. Keith Ellison introduced new legislation that would raise billions to invest in our economy by taxing highly speculative financial transactions. The Inclusive Prosperity Act (H.R. 6411) would tax the sale of stocks, bonds and derivatives sold by Wall Street firms. The tax imposed will be 0.5 percent on stocks, 0.1 percent on bonds, and 0.005 percent on derivatives or other investments.

Almost 30 nations have some form of a financial transaction tax and the U.S. had a similar tax from 1914 until 1966. The United Kingdom has had a tax on stock trades for decades – the same rate proposed in HR 6411 – and their volume of trading has grown robustly. Supporters of a form of financial transactions tax include business leaders such as Microsoft founder Bill Gates, Dallas Mavericks’ owner Mark Cuban, and Berkshire Hathaway chairman and CEO Warren Buffet.

The American public provided hundreds of billions to bailout Wall Street during the global fiscal crisis yet bore the brunt of the crisis with lost jobs and reduced household wealth. This is a phenomenally wealthy nation, yet our tax and regulatory system allowed the financial titans to amass great riches while impoverishing the systems that enable inclusive prosperity. A financial transaction tax protects our financial markets from speculation and provides the revenue needed to invest in the education, health and communities of the American people.

These funds could be used to strengthen America’s families, communities and economy by supporting state and federal investments that improve our health, rebuild our crumbling physical infrastructure, and create good jobs.

Because stock and bond markets are computerized adding a tax would be easy to track and enforce and tough to evade. The tax also would make high frequency trading unprofitable, which could reduce the excess speculation on commodities like food and gasoline that has caused their prices to escalate.