Mike Bloomberg became the third Democrat presidential candidate to call for a financial transactions tax.
Speaking with the New York Times, his campaign laid out its plan to rein in Wall Street.
Among the proposals, there is a plan to add a .1% financial transaction tax.
The full list of proposals given to the New York Times is listed below.
- A financial transactions tax of 0.1 percent
- Toughening banking regulations like the Volcker Rule and forcing lenders to hold more in reserve against losses
- Having the Justice Department create a dedicated team to fight corporate crime and “encouraging prosecutors to pursue individuals, not only corporations, for infractions”
- Merging Fannie Mae and Freddie Mac
- Strengthening the Consumer Financial Protection Bureau and “expanding its jurisdiction to include auto lending and credit reporting”.
Bloomberg joins Bernie Sanders and Elizabeth Warren as Democrats running for President who are in favor of the financial transactions tax.
New York Democratic Congresswoman Alexandria Ocasio-Cortez (AOC), a rising star in the Democratic party, is also in favor of a financial transactions tax, though she is not running for president.
The tax, if it were implemented, would hit traders, particularly high-frequency traders, the hardest.
The tax would apply to every buy and sell order, regardless of whether a profit was made on the transactions.
Furthermore, trades that make money for the trader would face a separate tax.
AOC introduced a financial transaction tax in the House in 2019; she introduced it with Peter DeFazio, a Democrat from the State of Oregon.
“What we were looking at is if there’s a sweet spot when you do a financial transaction tax,” DeFazio told CNBC in an interview at the time the bill was introduced. “This would pretty much be a sweet spot. You would be discouraging high-frequency trading, and this would definitely impede on their business model.”
The financial transactions tax (FTT) receives plenty of criticism as well.
Many say it will hurt liquidity in America’s capital markets, which are the most vibrant in the world.
Americans for Tax Reform noted this.
“This tax would have broad, negative economic effects. On a macroeconomic level, this tax would increase the cost of capital and reduce productivity which would in turn harm wages and jobs.
“This tax would also increase market volatility as there would be fewer buyers and sellers and therefore more price jumps.
“An FTT would especially impact fund managers that are responsible for 401(k)s, pensions, and index funds and make frequent trades. As a result, returns on pension funds and other savings would be lower because of the increased costs of buying and selling and the reduction in the value of shares.
While Democrats control the House of Representatives, Republicans control the Senate.
As such, AOC’s FTT has no chance of passing both houses, let alone surviving a Presidential veto, with the current construction of America’s legislature and presidency, but if Democrats took control of the Senate and the presidency after the election in November 2020, they may have the votes to make it law.
Bloomberg was mayor of New York City from 2002-2013; however, he ran as a Republican. He has since switched to a Democrat and is running in their primary for President.