Tax News

CCH (cch.taxgroup.com) reports:

  Democratic lawmakers are considering a proposal to institute a stock transaction tax in order to raise revenue to pay for job creation efforts, such as new spending on infrastructure, broadband expansion or providing new tax incentives to employers, according to House Speaker Nancy Pelosi, D-Calif. Pelosi told reporters during her weekly press conference on November 19 that some Democrats have suggested a stock transaction tax, but no decisions have yet been made to pursue that idea.

  Pelosi cautioned that such a tax might have drawbacks and would have to be part of an international rule in which other nations are involved. She explained that a stock transaction tax has long been suggested during international financial meetings, but U.S. officials have always resisted that effort. Now House Democrats are taking a closer look at the tax, even though it has yet to become a high priority for the Democratic Caucus, Pelosi said.

  One effort is being led by Rep. Peter DeFazio, D-Ore., who is seeking support for his legislation to raise $150 billion by imposing a .25-percent tax on stock transactions and a .02-percent tax on other transactions, including swaps, credit default swaps and options. Approximately half of the tax revenues would be used for deficit reduction and the remaining amount would go to a" job creation reserve" to fund the creation of good jobs, according to a Dear Colleague letter from DeFazio to other lawmakers. "The tax appropriately disincentivizes excessive speculation because much of the excessive risk on Wall Street is high-volume short-term speculative trading," he said in the letter.

  Houses Minority Whip Eric Cantor, R-Va., said the stock transaction tax is a bad idea, given that the U.S. financial markets are still recovering during the recession. Rep. Randy Neugebauer, R-Tex., said a tax on capital would lead to higher interest rates for small businesses seeking to borrow. Cantor and Neugebauer spoke during a meeting of the GOP Economic Solutions Group, which hopes to deliver a set of proposals to President Obama before he begins his economic tour in early December. Rep. Kevin Brady, R-Tex., said lawmakers are considering tax cuts for small businesses and permanent tax relief.

  By Stephen K. Cooper, CCH News Staff