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Consumer Action supports a financial transaction tax

It’s time for Wall Street traders to pay their fair share
 

WASHINGTON, D.C. – A tiny tax on financial transactions, proposed in both the U.S. Senate and U.S. House of Representatives, aims to raise revenue and cut down on speculative behavior in the stock market. The Wall Street Tax Act of 2019, introduced by Sen. Brian Schatz (D-HI) and Rep. Peter DeFazio (D-OR), and supported by more than 60 advocate groups, would impose a small tax (0.1 percent, or 10¢ per $100) on securities transactions, including trades of stocks, bonds and derivatives.

In today’s securities markets, computer programs run by algorithms without much human interaction to buy and sell securities in fractions of a second have led to new highs in market volatility. A financial transaction tax (FTT) has the potential to limit such speculative behavior.

“Consumer Action has long supported an FTT—a tiny, rather painless tax on transactions that would not only generate billions of dollars to fund important government programs, but could get high-frequency trading under control,” said Linda Sherry, director of national priorities for Consumer Action. “While high-frequency trading’s effect on the markets may seem esoteric, it actually negatively impacts everyday investors saving for long-term goals and retirement because it creates volatility and uncertainty in financial markets."

In 2016, the Joint Committee on Taxation estimated that an FTT of similar design could generate more than $700 billion over 10 years—extra revenue that could be used to fund critical government programs.

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Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers and regulators to advance consumer rights and promote industry-wide change.

By providing consumer education materials in multiple languages, a free national hotline, a comprehensive website (www.consumer-action.org) and annual surveys of financial and consumer services, Consumer Action helps consumers assert their rights in the marketplace and make financially savvy choices. Nearly 7,000 community and grassroots organizations benefit annually from its extensive outreach programs, training materials and support. Visit us on the web, at www.consumer-action.org.