Now, some members of Congress have put forth a bill that can get some of that wealth back from Wall Street. Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-IA) have introduced legislation titled the Wall Street Trading and Speculators Tax Act. It would impose a .03 percent tax on the trade of certain financial transactions. This Financial Transactions Tax (FTT) has the potential of raising $350 billion in revenue every year.
The proposed tax is actually fairly small, and some European leaders want to impose a tax of .10 percent, more than three times larger. To really understand how small this tax is, just think about the sales tax that an average American pays.
To buy common goods in most cities or states, Americans pay a sales tax much larger than .03 percent. According to an analysis by Vertex Inc. in 2010, the average combined sales tax that Americans paid in 2010 was 9.64 percent. That’s actually a rate a whopping 321 times larger than the FTT that DeFazio and Harkin are asking Wall Street and the rest of the financial industry to pay.
As Congress begins debating the FTT, it’ll be interesting to watch opponents of this new legislation say that it would be unfair to tax financial transactions at a rate 321 times less than what Americans pay when they buy a common good such as a tube of toothpaste or a clothing item.