Calling Wall Street A ‘Gambling Casino,’ Democratic Rep. DeFazio Proposes Financial Transactions Tax

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"Calling Wall Street A ‘Gambling Casino,’ Democratic Rep. DeFazio Proposes Financial Transactions Tax"

Rep. Peter DeFazio (D-OR)

Echoing the demands of the Occupy Wall Street protesters, Rep. Peter DeFazio (D-OR) is proposing to tax the trading of stocks, bonds, and derivatives. DeFazio, along with his Senate co-sponsor Sen. Tom Harkin (D-IA), has proposed the tax several times in the past. But this time around, the idea is getting a boost of momentum from the popularity of a similar measure in Europe, as well as renewed national media focus on Wall Street profiteering as a result of the 99 Percent Movement:

Declaring Wall Street a “gambling casino,” DeFazio said the new tax would “both raise needed revenue for the Treasury and rein in speculation on Wall Street.”

Already, the business community is mounting a counteroffensive. With the congressional supercommittee looking to trim at least $1.2 trillion in projected debt over 10 years, the tax could look tantalizing, despite public opposition from many Republicans and Treasury Secretary Timothy Geithner. […]

The tax could help shrink the deficit — its previous iteration was estimated to add $150 billion a year to federal coffers — and spare Social Security, Medicare and other programs from jarring cuts.

Even representatives from the U.S. Chamber of Commerce admit that this proposal is going to receive serious consideration this session, as congressional Democrats look to trim the deficit in a way that doesn’t overburden the middle and lower classes that are already stretched to the breaking point. “In reality, a proposal like this is going to be on the table in some regard,” said Tom Quaadman, executive director for financial reporting policy and investor opportunity at the U.S. Chamber of Commerce.

France and Germany have embraced taxing financial trades, and proponents say it’s only a matter of time before the common-sense solution is finally adopted in the U.S. While American bankers are predicting dire consequences if the tax goes into effect, Dean Baker, a co-director at the Center for Economic and Policy Research, says that’s nonsense. “The reality is all you’re doing is raising transaction costs back to where they were 15 or 20 years ago,” he says, noting that the tax has not prevented countries like the United Kingdom from developing vibrant economies.

Top economists and analysts like Reuters’ Felix Salmon have long advocated for a transaction tax as an important moderating influence on Wall Street excess. As Pat Garofolo has explained, “It will help temper trading for trading’s sake and excessive speculation, particularly in the form of high-frequency trading, which only major Wall Street players have the infrastructure to engage in and which will become far more expensive.”

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