Our nation is facing some of the greatest stresses that it has ever seen in its history: a pandemic, insurrection, racial and economic injustice, the climate crisis. As Americans get sick, families go hungry and rent goes unpaid, Wall Street firms are raking in record profits — a blatant example of the economic injustice that fuels distrust in our system as a whole.
Thankfully, hope is on the horizon. President Biden ran on a platform of bold tax fairness ideas, and the newly flipped Senate is positioned to pass tax proposals through reconciliation — the expedited budgetary process where decisions on spending, taxes, and the debt limit can be passed with a simple majority, bypassing the filibuster.
Given the grievous needs facing communities across the country, Congress must use reconciliation to develop a smart, progressive tax policy that levels the playing field by ensuring the ultra-wealthy pay their fair share, including Wall Street.
On Jan. 15, Rep. Peter DeFazio (D-Ore.) was joined by Majority Whip James Clyburn (D-S.C.) and a dozen other original co-sponsors in re-introducing the Wall Street Tax Act, a bill to implement a 0.1 percent tax on stock, bond and derivative trades. The idea is popular — all of the major Democratic candidates spoke favorably of a financial transaction tax on the campaign trail, and we’re seeing similar policies gain momentum in New York and New Jersey.
Unsurprisingly, as support for reinstating a transaction tax grows, Wall Street firms smell cuts to their outlandish profits and have become increasingly desperate in their defensiveness. As momentum for the Wall Street Tax Act builds, we can expect the financial industry to again parade out its tired litany of rigged data and mathematical distortions about the tax.
The truth about financial transaction taxes would be much harder for Wall Street to sell than its fictions. Middle income Americans with a typical retirement account would pay little more than $1 a month ($13 per year on average) with a 0.1 percent Wall Street tax. The majority of the tax would fall on the ultrawealthy — three-quarters of the revenues would come from the top 20 percent of earners and 40 percent from the top 1 percent. Even though the tax is small — just ten cents for every $100 of trades—it adds up to nearly $777 billion over 10 years. Moreover, the bill will create safer markets that keep costs low for average investors and encourage long-term, job-creating investments versus short-term speculation.
The fear-mongering Wall Street peddles about the tax is only made more ridiculous when you look at healthy markets, like that of Hong Kong, which has taxed financial trades for years, as well as the United Kingdom, which has similarly taxed stocks for hundreds of years.
The financial industry can continue to dump its money in rigged research, opposition websites and astroturf campaigns, but it will never be able to quash the sensibility of reinstating a tax that not only works in other countries, but has already functioned well in the United States. During the Great Depression, the rate of the existing financial transaction tax at the time was doubled and was instrumental in helping us get through that time of economic crisis.
It’s only a matter of time until this win-win policy is implemented, especially as Wall Street profits while the rest of the country struggles so mightily. Our country desperately needs new investments in education, health care, clean energy jobs, and repairing our crumbling infrastructure. It is commonsense to have the financial industry chip in an extra dime, like how we all pay sales taxes on our purchases.
To pass the Wall Street Tax Act, our path to victory lies in creating a public outcry loud enough to drown out the industry-created nonsense and convince even the most moderate U.S. senators that including a modest financial transition tax in their all-but-certain tax reconciliation package is a must.
The time has come for Wall Street to pay its fair share and help build back Main Street.
Susan Harley is managing director of Public Citizen’s Congress Watch.