Home / News / Policy news / Agricultural futures would be part of a bill to tax Wall Street

Agricultural futures would be part of a bill to tax Wall Street

Agriculture.com Staff 12/04/2009 @ 3:18pm

Senator Tom Harkin (D-IA) said Friday that he plans to introduce a bill to tax securities transactions. It would be similar to one announced Thursday by a group of Democrats in the House. The House bill would tax stock transactions at the rate of 0.25% (one-fourth of one percent) and futures transactions at a smaller rate of 0.02%.

Harkin said his bill isn't aimed at punishing Wall Street for its role in the nation’s financial collapse and recession.

"We're just looking for revenue. We're looking for a way to get out of the hole we're in," said Harkin, who pointed out that the U.S. had a tax on the sale of stocks until 1966.

But the bill rolled out Thursday in the House has a populist sounding title -- the "Let Wall Street Pay for the Restoration of Main Street Act." Introduced by Representative Peter DeFazio (D-OR) it would raise $150 billion a year, with half of the amount going to retire the federal deficit and the other half financing jobs through highway construction and other infrastructure. The bill is similar to one introduced last February by Representative Bruce Braley (D-IA), who is a cosponsor of the bill introduced this week.

The House bill is targeted at speculators, DeFazio's office says. It would refund the tax for tax-favored retirement accounts, mutual funds, education savings accounts, health savings accounts and the first $100,000 of transactions annually that aren't already exempt.

"Quite frankly, it comes from the top echelons or our society," Harkin said Friday. And it's supported by investor Warren Buffet, economist Paul Krugman, and others who believe it would slow the next speculative bubble.

"It might be a deterrent to the rapid churning that led to a lot of havoc in our marketplace," Harkin said.

When asked if the tax would also apply to agricultural commodities, Harkin said it would.

That surprises Scott Stewart, head of the Stewart-Peterson Group and past president of the National Introducing Brokers Association.

"You would think that Harkin or somebody would put in an exemption so it wouldn't affect hedging," said Stewart.

Senator Tom Harkin (D-IA) said Friday that he plans to introduce a bill to tax securities transactions. It would be similar to one announced Thursday by a group of Democrats in the House. The House bill would tax stock transactions at the rate of 0.25% (one-fourth of one percent) and futures transactions at a smaller rate of 0.02%.

At a rate of .02% the tax on a 5,000 bushel corn futures at $4 a bushel ($20,000) would amount to $4. And the $100,000 exemption would apply to futures contracts, according to Representative Bruce Braley's office. If you didn't have any other exemptions, that amounts to five of those $20,000 contracts.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
"Turnaround Tuesday" Fades