Democrats were unsuccessful in their push for a financial transactions tax after the 2008 financial crisis, but after 11 Eurozone countries received approval to institute such a tax Tuesday, two lawmakers are planning to try again. Rep. Peter DeFazio (D-OR) and Sen. Tom Harkin (D-IA) will reintroduce their proposal, which would raise an estimated $352 billion over the next decade by instituting a 0.03 percent tax on financial trades.
A financial transactions tax would slow down high-frequency trading, which has exploded in the last five years. Such trading “has absolutely no social value,” according to one of its pioneers, and only increases volatility in the market. The tax would have little effect on normal traders.
Critics of the Euro-wide turn to a transactions tax say it could slow down growth and encourage businesses to move elsewhere, and similar claims have been made about the American version. But 52 financial executives endorsed the tax last year, and DeFazio told ThinkProgress last year that such claims are false.
“For 50 years we had a tax that was about seven times larger than this when the country was seeing the greatest growth in its history, post-World War II,” he said. “So we’ve proven this will not have a detrimental impact on growth. In fact, it perhaps is beneficial to growth. It’s not necessarily beneficial to salaries of hedge fund managers on Wall Street.”