The GameStop situation highlights the serious issues of investor protection and market integrity, a White House spokesman told CNN Business on Sunday. The potential impact of a financial transaction tax on GameStop-like trading deserves additional study and could be part of a larger evaluation of such a tax on revenue and market stability, the spokesman said.
Some Democrats have backed a tax on stock trading as a way to generate much-needed income and address concerns about the health of the financial markets. On Thursday, Maxine Waters, chairman of House Financial Services, said she is “very interested” and “certainly looking at” a financial transaction tax.
A 0.1% tax on stock, bond and derivatives transactions could net the federal government $ 777 billion over the course of a decade, according to a 2018 estimate by the nonpartisan Congressional Budget Office.
However, such a tax would meet fierce opposition from Wall Street, and it is unclear whether moderate Democrats would support it. Opponents warn that it would backfire on private investors by increasing costs and making financial markets less liquid.
“This approach has a long history of unintended consequences that will punish employees, retirees and American families,” a spokesman for the Coalition to Prevent the Taxing of Retirement Savings told CNN Business.
That coalition includes the New York Stock Exchange, Nasdaq and UBS. Citadel Securities and Virtu Financial, two high-speed trading firms allegedly harmed by a financial transaction tax, are also members.
“An FTT will increase trading costs for investors – including individuals – undermine the competitiveness of our capital markets and harm the US economy, just as we work to recover from this pandemic,” said the spokesman.
Let’s not put the spotlight on the American people. You’ll be okay with the tax, ”she said. “Our people are tired of saving you all if you screw up.”