Democratic presidential candidate Michael Bloomberg on Tuesday proposed a financial transaction tax (FTT) as part of a wide-ranging financial reform plan the billionaire former New York City mayor unveiled ahead of Wednesday’s debate.
Bloomberg is proposing to work with Congress to implement a 0.1 percent tax on transactions for stocks, bonds and derivatives. He is calling for the tax to be phased in over time, starting at 0.02 percent, to limit any unintended consequences, according to a document from his campaign.
“Some of the world’s leading financial centers, such as the United Kingdom and Hong Kong, have found that taxing financial transactions can raise significant revenue, both to defray the costs of overseeing markets and to address other social needs,” the campaign document reads. “Such taxes can also help address inequality.”
Bloomberg’s campaign cited a 2015 paper from the Urban-Brookings Tax Policy Center that found that most of the tax burden from an FTT would fall on high-income households.
Bloomberg’s call for a tax on financial trades comes one day before he qualified to participate in his first Democratic presidential debate in Nevada.
Bloomberg — who amassed his fortune by creating a financial information company and has spent millions of dollars of his own money on his campaign — has seen rising levels of support in polls but has been facing criticisms from progressives about some of his past comments about financial regulations.
Earlier this month, Bloomberg released a slew of other tax proposals focused on increasing taxes on wealthy individuals and corporations. These proposals included raising the top individual income rate from 37 percent to 39.6 percent, creating a 5-percent surtax on incomes above $5 million and raising the corporate tax rate from 21 percent to 28 percent.
Other Democratic presidential candidates who have proposed FTTs include progressive Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), as well as former South Bend, Ind., Mayor Pete Buttigieg, who, like Bloomberg, is positioning himself as a moderate. Taxes on financial trades also have the support from a number of left-leaning organizations.
But the business community and Republicans have been pushing back on Democratic candidates’ proposals for FTTs.
The U.S. Chamber of Commerce released a report in September arguing that FTTs would be paid by ordinary investors saving for their retirements and that FTTs in other countries have raised less revenue than expected. At a hearing in December, House Republicans and Treasury Secretary Steven Mnuchin expressed concerns about FTTs, with Mnuchin saying he was worried that this type of tax would hurt the U.S. capital markets and Americans who have mutual funds.
“The U.S. wisely repealed a Financial Transaction Tax we had in place over 40 years ago, but it appears advocates failed to learn from our past,” Tom Quaadman, executive vice president for the U.S. Chamber’s Center for Capital Markets Competitiveness, said in a statement Tuesday. “A Financial Transaction Tax will increase the cost of capital, decrease investment, harm businesses and hurt Americans who are saving and investing.”
– updated at 2:46 p.m.