Financial trade tax faces uphill battle in U.S.
Proposed taxes on financial transactions face an uphill battle in the United States with powerful interests opposed and a lack of support among some key U.S. lawmakers.
Proposals in the U.S. House of Representatives that would put a 0.25 percent tax on over-the-counter derivatives transactions and stock trades are among ideas being mulled by top lawmakers.
But support is lackluster among tax-writing legislators and the idea is likely to hit a roadblock in the Senate, where consensus is harder to achieve.
“It comes up because it looks like a money machine… it’s a very tiny tax on a lot of transactions and seems painless,” said Clint Stretch, managing principal for tax policy at Deloitte, and former counsel for the joint congressional tax committee. “If you are a mutual fund manager, in and out of the market all the time, those little pieces of pennies would accumulate.”
One proposal says it could raise $100 billion a year.
Lobbyists for securities firms, brokers and banks are all watching the debate but believe it ultimately will fail.
In addition, U.S. Treasury Secretary Timothy Geithner has been skeptical on the idea.
“The Obama administration clearly does not support a daily transaction tax,” Anne Mathias, an analyst in Washington at Concept Capital, told clients in a note. “We cannot completely dismiss the slight possibility it could be part of a House jobs bill in the next month or so, but we think even if it cleared the House it would have virtually no chance in the Senate bad credit cash loans.”
Several Democratic leadership aides said it was premature to say whether a transaction tax, which is also being pushed by unions, would be included in the final package as it is one of many items under consideration.
PROPOSALS
Representative John Larson, the No. 4 Democrat in the House, has proposed a 0.25 percent tax on over-the-counter derivatives transactions, but his measure has drawn no co-sponsors since it was introduced in July.
Another proposal, backed by Democratic Representative Peter DeFazio, would tax oil futures and derivatives transactions in order to fund transportation projects. That measure has drawn the support of 29 co-sponsors, including Larson and others close to House Speaker Nancy Pelosi.
A proposal from Democrat Ed Perlmutter would reinstate a fee on stock transactions of 0.25 percent that existed from the Great Depression until the 1960s. A spokeswoman said the Democrat has had preliminary discussions with House leaders on it.
TAPPING INTO ANGER
Democrats hope to bring down the unemployment level before the November 2010 congressional elections, but they also face rising public concern over record budget deficits.
Filed under: legal by Wolf