The wild volatility in GameStop Corp. shares this year has emboldened Democrats who support a tax on stock trades.
A financial-transaction tax, or FTT, would raise money by collecting a fraction of the value of securities trades. Proponents say such a tax could help fund programs like President Biden’s $2 trillion infrastructure plan, while reining in high-frequency trading and excessive speculation. Critics, including Wall Street lobbying groups, say it is a flawed policy that would hurt investors.
Left-leaning politicians such as Vermont Sen. Bernie Sanders have long advocated a transaction tax, with little success. Now, with Democrats holding the White House and narrow majorities in Congress, progressives have their best chance in years of enacting an FTT. Potentially, such a tax could be passed without Republican support, using the budget-reconciliation process that allows tax and spending bills to pass the Senate on a simple majority vote.
To be sure, the odds are still against an FTT passing Congress. There is broader support among Democrats for other ways to raise revenues, such as lifting the top individual tax rate or corporate tax rate, both of which were lowered under former President Donald Trump. Still, the idea of taxing trades has gained traction among more centrist Democrats in recent years, raising the hopes of FTT advocates.
“There’s much broader support and interest in the concept among members of Congress than there was a decade ago,” said Antonio Weiss, a Treasury Department official in the Obama administration who proposed his own version of a transaction tax last year.