It’s just Tuesday, and Rep. Alexandria Ocasio-Cortez (D-N.Y.) is all the news it seems. However, it’s not all good. A resolution she’s signed on to will be introduced that will call for Wall Street investors and traders to be taxed.
As lawmakers ready to debate this financial services tax, Ocasio-Cortez is facing questions about her chief of staff allegedly violating campaign finance law. On Tuesday, she told reporters “there is no violation.”
The resolution that’s being introduced has a fitting name – Wall Street Tax Act of 2019.
Before it was even formally introduced, critics and supporters have piled on. Of course, their commentary is along partisan lines.
However, before investors get too riled up, there are some takeaways that could mitigate concerns about the bill.
The Wall Street Tax Act of 2019 is the brainchild of Rep. Peter DeFazio (D-Oregon). It’s actually a re-introduction of a bill that failed to be passed a few years ago when Democrats did not have control of the House.
The bill could lead to $777 billion being raised over the next decade. Banter has included it being a way to help pay for Ocasio-Cortez’s proposed $93 trillion Green New Deal that she dreams of making a reality.
If the bill makes it through the House and is signed by President Trump, it would:
Considering the tax would amount to just .1%, some say it’s not enough to deter traders. Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, said on CNBC:
“We’re talking about 10 basis points, so on a $1,000 trade, if I’m doing my arithmetic right, that’s a dollar. A dollar on a $1,000 trade on a market that’s trading billions of trade a day, if that’s going to take down the problem, we’ve got much bigger problems than a [financial transaction tax].”
Bernstein said the tax would be a progressive revenue raiser, which is one reason Democrats like it. He added that 40% of the stock market’s value is held by the top one percent in terms of wealth of traders.
“The impact on volumes could be negative, but would this be detrimental to trading and price signals? Evidence is that it won’t.”
Opponents say the tax would deter people from investing.
Adam Michel, a senior analyst at The Heritage Foundation, told CNBC:
“This has been tried around the world, like in France and Italy, and every time they’ve been tried we see that they don’t work as intended. They actually increase stock market volatility. They don’t raise as much revenue as people think they are going to.”
Michel said the tax would ultimately hurt everyone who’s involved in the stock market.
“That’s not just the rich, but that’s you and I and our 401k, but it’s also teachers and firefighters who are invested through their pensions. This isn’t an effective way to raise the revenue that folks are looking for.”
John Rose, a freshman Republican from Tennessee also sits on the House Financial Services Committee. Addressing the tax proposal, he said he was not a fan. Generally, when you tax something, you discourage it, he said.
“It will be tough to stop [the resolution] in the House, but it will have a tougher chance of passing the Senate. Americans have entrusted Republicans with control of the Senate and with the presidency so I’m confident that this will not become law.”
DeFazio said it would rein in high-frequency trading activities.
Scott Shellady, the managing director at TJM Europe, commented on the idea of taxing Wall Street during an interview with Fox Business Tuesday morning. He noted that all the noise around trying to target high-frequency traders, or speculators, isn’t good.
“I love it how people want to tax financial transactions. That’s a business they know nothing about, especially AOC. These speculators have an economic function.”
Caught up in this Wall Street tax debate is Ocasio-Cortez, of course. She’s a co-sponsor of the bill that was introduced in the House Financial Services Committee, joining others who detest the thought of the wealthy not being taxed to the hilt. The rich and corporations get too many breaks, she’s charged.
Her rants, in particular, fly in the face of very serious allegations that surfaced Monday. CCN.com reported that her chief of staff may have violated finance campaign laws to the tune of more than $1 million, citing an explosive investigation by the Washington Examiner.
The allegations were detailed in a complaint submitted to the Federal Election Commission (FEC) Monday. The allegations could significantly curtail her burgeoning influence among Democrat ranks on Capitol Hill, CCN.com noted.
The chief of staff, Saikat Chakrabarti, is being accused of diverting donations from Ocasio-Cortez’s supporters into a slush fund. The fund is reportedly controlled by two private companies registered to him, ostensibly for the purpose of obscuring what the money was used to do.
Given Ocasio-Cortez has no qualms in lashing out at anyone who challenges her, pundits returned the favor on the FEC news.
Shellady didn’t mince any words when it came to criticizing what CCN.com’s called “the AOC effect.”
“They don’t understand that this is a tax on their retirements, and lot of different things that take place in a trading day. I almost can’t talk about it because [Ocasio-Cortez] is so white hot right now. These Democrats are flying around her like gnats to a flame. She will burn out, it’s just [a matter of] when.”
Last modified: July 2, 2020 8:14 PM UTC