H. R. 880
IN THE HOUSE OF REPRESENTATIVES
February 28, 2013
Mr. DeFazio (for himself, Ms. Slaughter, Ms. Norton, Mr. Scott of Virginia, Mr. Capuano, Ms. Pingree of Maine, Mr. McGovern, Mr. Conyers, Mr. Huffman, Mr. Grijalva, Mr. Welch, Ms. Schakowsky, Mrs. Napolitano, Ms. Edwards, Mr. Sarbanes, Mr. Michaud, Ms. Brown of Florida, Mr. Ellison, Ms. Chu, Ms. DeLauro, and Mr. Blumenauer) introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to impose a tax on certain trading transactions.
This Act may be cited as the
Wall Street Trading and Speculators
Chapter 36 of the Internal Revenue Code of 1986 is amended by inserting after subchapter B the following new subchapter:
Tax on Trading Transactions
Sec. 4475. Tax on trading transactions.
Tax on trading transactions
Imposition of tax
There is hereby imposed a tax on each covered transaction with respect to any security.
Rate of tax
The tax imposed under subsection (a) with respect to any covered transaction shall be 0.03 percent of the specified base amount with respect to such covered transaction.
Specified base amount
For purposes of this section, the term
base amount means—
except as provided in paragraph (2), the fair market value of the security (determined as of the time of the covered transaction), and
in the case of any payment described in subsection (h), the amount of such payment.
For purposes of this section, the term
except as provided in paragraph (2), any purchase if—
such purchase occurs or is cleared on a facility located in the United States, or
the purchaser or seller is a United States person, and
any transaction with respect to a security described in subparagraph (D), (E), or (F) of subsection (e)(1), if—
such security is traded or cleared on a facility located in the United States, or
any party with rights under such security is a United States person.
Security and other definitions
For purposes of this section—
The term security means—
any share of stock in a corporation,
any partnership or beneficial ownership interest in a partnership or trust,
any note, bond, debenture, or other evidence of indebtedness,
any evidence of an interest in, or a derivative financial instrument with respect to, any security or securities described in subparagraph (A), (B), or (C),
any derivative financial instrument with respect to any currency or commodity, and
any notional principal contract.
Derivative financial instrument
The term derivative financial instrument includes any option, forward contract, futures contract, or any similar financial instrument.
Notional principal contract
otherwise provided by the Secretary, the term
contract means any financial instrument which requires two or more
payments at specified intervals calculated by reference to a specified index
upon one or more notional principal amounts. An amount shall not fail to be
treated as a payment described in the preceding sentence merely because such
amount is fixed on one date and paid or otherwise taken into account on a
The term specified index means any 1 or more of any combination of—
a fixed rate, price, or amount, or
a variable rate, price, or amount,
any index based on any objectively determinable information (including the occurrence or nonoccurrence of any event) which is not within the control of any of the parties to the instrument and is not unique to any of the parties’ circumstances, and
any other index as the Secretary may prescribe.
Treatment of exchanges
An exchange shall be treated as the sale of the property transferred and a purchase of the property received by each party to the exchange.
Certain deemed exchanges
In the case of a distribution treated as an exchange for stock under section 302 or 331, the corporation making such distribution shall be treated as having purchased such stock for purposes of this section.
Exception for initial issues
No tax shall be imposed under subsection (a) on any covered transaction with respect to the initial issuance of any security described in subparagraph (A), (B), or (C) of subsection (e)(1).
Exception for certain traded short-term indebtedness
A note, bond, debenture, or other evidence of indebtedness which—
is traded on a trading facility located in the United States, and
has a fixed maturity of not more than 100 days,
Exception for securities lending arrangements
No tax shall be imposed under subsection (a) on any covered transaction with respect to which gain or loss is not recognized by reason of section 1058.
By whom paid
The tax imposed by this section shall be paid by—
in the case of a transaction which occurs or is cleared on a facility located in the United States, such facility, and
in the case of a purchase not described in subparagraph (A) which is executed by a broker (as defined in section 6045(c)(1)) which is a United States person, such broker.
Special rules for direct, etc., transactions
In the case of any transaction to which paragraph (1) does not apply, the tax imposed by this section shall be paid by—
in the case of a transaction described in subsection (d)(1)—
the purchaser if the purchaser is a United States person, and
the seller if the purchaser is not a United States person, and
in the case of a transaction described in subsection (d)(2)—
the payor if the payor is a United States person, and
the payee if the payor is not a United States person.
Certain payments treated as separate transactions
Except as otherwise provided by the Secretary, any payment with respect to a security described in subparagraph (D), (E), or (F) of subsection (e)(1) shall be treated as a separate transaction for purposes of this section, including—
any net initial payment, net final or terminating payment, or net periodical payment with respect to a notional principal contract (or similar financial instrument),
any payment with respect to any forward contract (or similar financial instrument), and
any premium paid with respect to any option (or similar financial instrument).
Application to transactions by controlled foreign corporations
For purposes of this section, a controlled foreign corporation shall be treated as a United States person.
Special rules for payment of tax on direct, etc., transactions
In the case of any transaction which is a covered transaction solely by reason of paragraph (1) and which is not described in subsection (g)(1)—
Payment by United States shareholders
Any tax which would (but for this paragraph) be payable under subsection (g)(2) by the controlled foreign corporation shall, in lieu thereof, be paid by the United States shareholders of such controlled foreign corporation as provided in subparagraph (B).
Pro rata shares
Each such United States shareholder shall pay the same proportion of such tax as—
the stock which such United States shareholder owns (within the meaning of section 958(a)) in such controlled foreign corporation, bears to
the stock so owned by all United States shareholders in such controlled foreign corporation.
purposes of this subsection, the terms
United States shareholder
controlled foreign corporation have the meanings given such
terms in sections 951(b) and 957(a), respectively.
The Secretary shall carry out this section in consultation with the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The Secretary shall—
provide guidance regarding such information reporting concerning covered transactions as the Secretary deems appropriate, and
prescribe such regulations as are necessary or appropriate to prevent avoidance of the purposes of this section, including the use of non-United States persons in such transactions.
Credit with respect to certain tax-Favored accounts To offset transaction tax
Subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after section 36B the following new section:
Offset for transaction tax with respect to certain tax-favored accounts
There shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to 0.03 percent of the qualified tax-favored account contributions of the taxpayer for the taxable year.
Qualified tax-Favored account contributions
For purposes of this section,
qualified tax-favored account contributions means, with
respect to any taxable year, the sum of—
with respect to qualified retirement plans (as defined in section 4974(c)) of the taxpayer, the amount contributed to such plans for such taxable year to the extent that such contributions are allowable as a deduction or are excludable from gross income (or, in the case of a Roth IRA (as defined in section 408A(b)), the amount contributed),
with respect to Archer MSAs of the taxpayer, the amount allowed as a deduction under section 220 for such taxable year,
with respect to health savings accounts of the taxpayer, the amount allowed as a deduction under section 223 for such taxable year, plus
with respect to qualified tuition programs (as defined in section 529) and Coverdell education savings accounts (as defined in section 530) with respect to which the taxpayer is the designated beneficiary (or, in the case of a designated beneficiary with respect to whom another taxpayer is allowed a deduction under section 151, such other taxpayer in lieu of such designated beneficiary), the amount contributed for such taxable year.
Section 1324(b)(2) of title 31, United
States Code, is amended by inserting
, 36C after
The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting before the item relating to section 37 the following new item:
Sec. 36C. Offset for transaction tax on contributions to certain tax-favored accounts.
Information reporting with respect to controlled foreign corporations
Subparagraph (B) of section 6038(a)(1) is amended by
and transactions which are covered transactions for purposes
of section 4475 by reason of the application of section 4475(i)(1) to such
corporation before the semicolon at the end.
The table of subchapters for chapter 36 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to subchapter B the following new item:
Subchapter C. Tax on trading transactions.
The amendments made by this section shall apply to transactions after December 31, 2013.