CONGRESS MULLS BILL TO IMPOSE FINANCIAL TRANSACTIONS TAX

Congress is considering a bill that would impose a 3% tax on financial transactions in stocks and bonds at their market value, as well as on derivative contracts, options, puts, forward contracts and swaps at their purchase price. Under the proposal, the broker dealer that places the order for a stock or mutual fund would be responsible for paying the tax.

The bill was written by Senator Tom Harkin, D-Iowa, and Representative Peter DeFazio, D-Oregon. In a press conference, Sen. Harkin stated the revenue generated by the tax is necessary to “reduce the deficit and maintain critical investments in education, infrastructure and job creation.” Proponents of the plan estimate that the new tax could generate around $100 billion annually.

However, critics of the bill say it amounts to what is essentially a sales tax on investors and retirees will be hurt when the costs of the tax are passed along in 401(k) fees and other charges.