Congress Considers Federal Transaction Tax

Sunday, October 25, 2009

"Deal-makers may need to start budgeting for a special transaction tax if some members of Congress get their way. While such a tax is not expected to be passed anytime soon, it is one of the ideas being floated about on Capitol Hill these days as a way to raise money to fill the expanding hole in the federal budget.

The tax could be levied on transactions ranging from over-the counter derivatives trades to large mergers. Its intent is to help curb excess speculation as well as a way to build revenue.

The United States had a transaction tax from 1914 to 1966. The Revenue Act of 1914 levied a 0.2 percent tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help overcome the budgetary challenges during the Great Depression. It was phased out in 1966 and has not been seriously considered as a revenue source until now." - New York Times

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