by Keane Bhatt and David Stephen
Washington, May 22, 2019 – Today, Rep. Barbara Lee, D-Calif., and Sen, Bernie Sanders, I-Vt., introduced the Inclusive Prosperity Act along with Sen. Kirsten Gillibrand, D-N.Y., and more than a dozen House Democrats.
The legislation imposes a tax of a fraction of a percent on the trades of stocks, bonds and derivatives. This tax on Wall Street speculation, also known as a financial transaction tax, is estimated to generate up to $2.4 trillion in public revenue from wealthy investors over 10 years. An added benefit of the proposed tax is deterring the high-frequency trading that increases the instability of the financial sector and produces no economic value.
Wall Street enjoys record-breaking profits despite its role in triggering the financial crisis of 2008. The top 400 richest Americans now own more wealth than 150 million Americans – 60 percent of the country. Meanwhile, a typical middle-class family in America has seen its net worth decline by 30 percent from 2007 to 2016. More than 1,000 economists have endorsed a tax on financial speculation, and40 countries currently impose the tax, including Britain, which first instituted the tax on stock trades in 1694.
“I am proud to introduce the House version of the Inclusive Prosperity Act because taxing Wall Street is not an extreme idea. The government already taxes everyday families for basic items like food, clothes and housing. Wall Street gets away with no taxes, even when conducting high-risk financial transactions,” said Barbara Lee. “This has to stop. It’s past time to make sure Wall Street pays their fair share so that we can provide funding for things that make us a better nation like jobs, housing, infrastructure and college education.”
“While the top 23 banks in America received over $20 billion in tax breaks last year as a result of the Trump tax plan, hundreds of thousands of young people are unable to go to college because they can’t afford it, 34 million Americans have no health insurance, one out of five Americans can’t afford to buy the medicine prescribed by their doctors, over 40 million Americans are living in poverty, we have the highest childhood poverty rate in the developed world and life expectancy in the U.S. has gone down for the third year in a row,” said Sanders. “It is long past time for Congress to rein in the recklessness of Wall Street billionaires and build an economy that works for all Americans.”
Proud to stand with @SenSanders today as we introduced the #InclusiveProsperity Act. It’s time for Wall Street to pay their fair share of taxes and invest in critical programs like #MedicareForAll, #DebtFreeCollege, affordable housing, and more. pic.twitter.com/awC4fwG6Ie— Rep. Barbara Lee (@RepBarbaraLee) May 22, 2019
“More than a decade after Wall Street greed brought the American economy to its knees, big banks are still using greed as a business model and are still engaging in the reckless behavior that helped cause our economy to crash in the first place,” said Gillibrand. “We need to do everything we can to prevent another financial crisis.
“The Inclusive Prosperity Act is a bold step to clamp down on reckless and speculative trading. This legislation would put a price on risky Wall Street behavior and would bring much-needed revenue to Main Street, which never should have been handed over to bail out Wall Street. I urge all of my colleagues to fight with me to pass this bill as quickly as possible.”
“We applaud Rep. Lee and Sen. Sanders for introducing the Inclusive Prosperity Act, a step toward making Wall Street pay its fair share in taxes and actually invest in the real economy rather than gamble with it.”
“Nurses know that economic inequality and poor health go hand in hand. Every day, we see people who come into our emergency rooms in medical crisis because they went without preventative care or medicine because they couldn’t afford it,” said National Nurses United President Jean Ross, R.N. “This small tax on Wall Street will improve the lives of millions of people by funding Medicare for All, public college for all, critical environmental and climate change mitigation programs, job creation, housing assistance, and HIV/AIDS treatment and prevention programs. We applaud Sen. Sanders and Rep. Lee for their leadership on this vital issue.”
“Wall Street traders and speculators play an outsized role in our economy, but a loophole in our tax system allows them to avoid the kind of sales tax that working families pay every day. The Inclusive Prosperity Act will ensure that Wall Street pays its fair share. It will put the brakes on the kind of risky high-volume trading that encourages short-term speculation instead of long-term investments that keep good jobs in our communities. CWA supports this bill as an important step toward bringing fairness to our tax system,” said Communications Workers of America President Christopher Shelton.
“Today, Wall Street firms make money from high-frequency, speculative trading, often holding financial instruments for minutes, seconds or even milliseconds. Rather than drive productive investment into the economy, high-frequency trading only serves to make some traders enormously wealthy, while posing a risk to financial stability,” said Marcus Stanley, policy director of Americans for Financial Reform.
“Our country and our world face a series of crises that call for ambitious government action. Our national water crisis requires the federal government to step up and provide adequate funding to our water systems. And the existential threat of climate change calls for a fair and just transition off fossil fuels. To accomplish both, we need federal action and federal funding. The Inclusive Prosperity Act is essential. It’s a small tax on Wall Street to make big change on Main Street,” said Mitch Jones, climate and energy program director of Food and Water Watch.
“Working families pay sales taxes on almost everything from a pair of shoes to a can of soup, yet Wall Street traders aren’t subject to taxes when they buy or sell financial products. In fact, not only is Wall Street being allowed to trade tax-free, they are skimming off profit from the real economy by using high-speed, algorithm-based trading which has no social value,” said Luísa Galvão of the Take on Wall Street campaign. “We applaud Rep. Lee and Sen. Sanders for introducing the Inclusive Prosperity Act, a step toward making Wall Street pay its fair share in taxes and actually invest in the real economy rather than gamble with it.”
The legislation sets different rates on stocks, bonds and derivatives based on the existing transaction costs in each market – 0.5 percent for stocks, 0.1 percent for bonds and 0.005 for derivatives. This more targeted approach roughly equalizes the increase in transaction costs across securities due to the tax and thus reduces the economic distortions and tax avoidance possibilities created by it.
Lee’s House companion was introduced with original cosponsors Reps. Holmes Norton (D- District of Columbia), Takano (D-Calif.), Khanna (D-Calif.), Cohen (D-Tenn.), Jayapal (D-Calif.), DeLauro (D-Conn.), Omar (D-Minn.), McGovern (D-Mass.), Huffman (D-Calif.), Pocan (D-Wis.), Schakowsky (D-Ill.), Grijalva (D-Ariz.), Pingree (D-Maine), Lowenthal (D-Calif.), Gabbard (D-Hawaii), Espaillat (D-N.Y.), Tlaib (D-Mich), Garamendi (D-Calif.), and Hastings (D-Miss).
Keane Bhatt can be reached in Sen. Sanders’ Office at Keane_Bhatt@sanders.senate.gov, and David Stephen can be reached in Rep. Lee’s Office at David.Stephen@mail.house.gov. Congresswoman Lee is the co-chair of the Steering and Policy Committee, a senior member of the Appropriations Committee, former chair of the Congressional Black Caucus, chair emeritus of the Progressive Caucus, co-chair of the Pro-Choice Caucus, and a senior Democratic whip. She also serves as chair of the Majority Leader’s Task Force on Poverty and Opportunity. Contact her at her Oakland office, 1301 Clay Street, Ste. 1000-N, Oakland, CA 94612, 510-763-0370.