Tax Tip of the Week | No. 364 | A Proposed New Tax
Tax Tip of the Week | July 20, 2016 | No. 364 | A Proposed New Tax
I ran across this article in the Daily Tax Report that I thought you might find interesting………Rep. Peter DeFazio (D-Ore.) is scheduled to introduce a plan to levy a 0.03 percent tax on most financial trades as he seeks to curb high-frequency trading.The legislation, introduced on July 13, “will discourage risky trading behaviors that put everyday Americans’ investments on the line and is expected to collect over $417 billion in revenue in the next decade,” according to a July 11 statement from DeFazio's office. DeFazio introduced similar legislation in 2013.Financial transactions taxes gained popularity with some Democrats after the so-called 2010 flash crash, when markets fell and rebounded quickly partially as a result of computer algorithms designed to buy and sell securities fast to make a fraction of a cent's profit on the trade.The Democratic Party platform, set to be ratified at the convention later this month, supports taxing Wall Street to curb “excessive speculation and high-frequency trading” and notes that there is room within the party for a “diversity of views” on a broader tax.DeFazio's 0.03 percent tax is one of the lower ones proposed in recent years. Sen. Bernard Sanders (I-Vt.) and Rep. Keith Ellison (D-Minn.) have introduced legislation that would tax trades at up to 0.5 percent.Higher rates raise more revenue but could also make markets less liquid and increase the cost of capital. A January report from the Urban-Brookings Tax Policy Center said that financial transactions taxes are of interest because “the base is so large that even a tiny tax rate would raise significant revenue.The tax would be imposed on stock, bond, derivatives, partnership interests, actively traded commodities and currencies, according to an outline of the plan.No tax would be levied for initial public offerings, short-term loans or insurance contracts. The plan includes a credit for retirement accounts and health or college savings accounts.Looks like another attempt by Congress to micro-manage the economy.We’ll keep you posted.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.Rick Prewitt – the guy behind TTW...until next week.