Rep. Peter DeFazio Introduces “Putting Main Street FIRST” Act to Rein In Speculative Wall Street Trading
Rep. Peter DeFazio (D-OR) today introduced legislation that would levy a 0.03 percent tax on transactions of stocks, bonds and derivatives to discourage the risky speculative financial trading that led to the 2008 Wall Street collapse and 2010 ‘flash crash’.
Rep DeFazio introduced the bill today in recognition of the seven-year anniversary of the so-called ‘flash crash” of 2010. On May 6, 2010, the Dow Jones index lost almost 9 percent of its value in a matter of minutes, as hundreds of billions of dollars were wiped off the share prices of major companies. Much of the excessive risk and volatility on Wall Street is caused by high-volume, short-term speculative trading, which the Putting Main Street FIRST Act would discourage. To see a video of Rep. DeFazio speaking on the Putting Main Street FIRST Act, click here.
The Putting Main Street FIRST Act: Finishing Irresponsible Reckless Speculative Trading, H.R. 2306, would provide billions of dollars in revenue each year by taxing three basis points, or three pennies for every hundred dollars, on most financial trading including stocks, bonds, and other transactions. According to the Joint Committee for Taxation, the tax would raise $417 billion over ten years, which could be used to fund national priorities such as affordable higher education or investment in our crumbling infrastructure that would create tens of thousands of jobs and boost America’s competitiveness in the global economy.
“President Trump has filled his administration with Wall Street executives and corporate bankers,” said Rep. Peter DeFazio. “Congress needs to protect Main Street from dangerous behaviors like speculative financial trading and near-instantaneous high-volume trades—the same behaviors that created the conditions that led to the 2008 Wall Street collapse and 2010 flash crash. These financial practices exist solely to churn out transactions that provide no real capital in the market, while leaving middle-class Americans behind.”
“Working families pay their fair share and more in taxes,” said CWA President Chris Shelton. “It’s long past time that Wall Street traders and speculators stepped up. Congressman DeFazio’s plan for a financial transaction tax will put the brakes on Wall Street speculation and excesses by closing the loophole that allows Wall Street trades to avoid the kinds of sales tax that working families pay every day. We’re proud to join with him and progressive organizations that are working for real tax fairness and to counter destructive, one-sided tax proposals like those recently announced that further reward the wealthy at the expense of the rest of us.”
“The ‘Putting Main Street First Act’ will help encourage long-term investing, fund badly needed public investment and make our tax code fairer for working people,” said AFL-CIO Director of Policy Damon Silvers.
“It can happen in a flash—markets bottom out because high-frequency computer algorithms flock toward trading trends instead of riding out regular market ups and downs,” said Susan Harley, Public Citizen’s Congress Watch division. “Taxing Wall Street trades will help to solve this market irrationality by adding a small speed bump and make millisecond trades unprofitable while average investors will not even notice the tiny tax. And those three small cents out of every hundred dollars traded stacks up to more than $417 billion in revenue over ten years according to an official congressional analysis. Public Citizen applauds the reintroduction of this critical reform.”
“We applaud Representative DeFazio's financial transaction tax proposal; a Wall Street speculation tax would not only help move our financial markets away from dangerous high-frequency trading, but also raise significant revenue to address unmet needs,” said Lisa Donner, Executive Director of Americans for Financial Reform. “Given the massive costs of the financial crisis and its devastating impact on families across the country -- and on the wealth of communities of color in particular -- it is long past time for Wall Street to pay its fair share in taxes.”
“This tax is a great way to raise money for the federal government by making the financial sector more efficient,” said Dean Baker, Co-Director of the Center for Economic and Policy Research. “The cost of the tax will be fully covered by the savings from reduced trading. This means that the ordinary investor will be left unharmed by this tax. The only people who feel the impact will be the short-term traders and the financial intermediaries.”
The bill has been endorsed by Public Citizen, the Center for Economic and Policy Research, the Institute for Policy Studies, Americans for Financial Reform, the Communications Workers of America (CWA), the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), and the American Federation of State, County, and Municipal Employees (AFSCME).