The GameStop situation underscores the serious issues of investor protection and market integrity, a White House spokesman told CNN Business on Sunday. The spokesman said the potential impact of a tax on financial transactions on GameStop-like trading deserves extra study and could be part of a larger evaluation of such a tax on revenue and market stability.
Some Democrats have backed a tax on stock trading as a way to raise much-needed revenue and address concerns about the health of financial markets. Maxine Waters, chair of House Financial Services, said on Thursday that she was “very interested” and “certainly” looking at a tax on financial transactions.
A 0.1% tax on equities, bonds and derivatives could yield $ 777 billion for the federal government over a decade, according to a 2018 estimate by the non-partisan Congressional Budget Office.
However, a tax will be opposed against Wall Street and it is unclear whether moderate Democrats will support it. Opponents warn that it will hit retail investors back by raising costs and making financial markets less liquid.
“This approach has a long history of unintended consequences that will punish workers, retirees and American families,” a spokesman for the Coalition to Avoid Taxes on Pension Savings told CNN Business.
The coalition includes the New York Stock Exchange, Nasdaq and UBS. Citadel Securities and Virtu Financial, two high-speed trading companies that would be disadvantaged by a tax on financial transactions, are also members.
“A FTT will increase the trading costs for investors – including individuals -, undermine the competitiveness of our capital market and harm the US economy just as we work to recover from this pandemic,” the spokesman said.
“Let’s not incite the American people. The tax is going well,” she said. “Our people are tired of saving you all when you get on track.”