Financial Transaction Tax May Have Little Chance to Become Law

Firms in the financial sector were galvanized into opposition recently when Democrats in the U.S. Senate and House of Representatives introduced the Wall Street Tax Act of 2019. The legislation would impose a tax of 1/10th of 1 percent on securities or derivatives trading transactions to offset the federal budget deficit.

Sponsors include Senators Jeff Merkley (D-OR), Chris Van Hollen (D-MD), Kirsten Gillibrand (D-NY), and Brian Schatz (D-HI), and Representatives Peter DeFazio (D-OR) and Alexandria Ocasio-Cortez (D-NY).  A previous version of this legislation proposed tax credits to offset the tax effects on transactions tied to tax-favored savings accounts, such as IRAs and 401(k) plans, but there appear to be no defined offsets or exemptions for such accounts in this version of the legislation.

Although the highly controversial legislation has received significant publicity, it is given little chance of enactment in this Congress given the Republican majority in the Senate, regardless of what happens in the Democrat-controlled U.S. House of Representatives.