Financial Transaction Tax (“FTT”)

On Thursday, December 5, the House Financial Services Committee held a hearing entitled, “Promoting Financial Stability? Reviewing the Administration’s Deregulatory Approach to Financial Stability.” Republicans on the Committee – including Ranking Member Patrick McHenry (R-NC) – used the hearing as an opportunity to highlight concerns with proposals to impose a tax on certain financial transaction.

Financial transaction tax proposals generally impose a small tax when, for example, an individual buys or sells a stock. Supporters argue that a financial transaction tax would curb stock market speculation and volatility. Opponents raise concerns about the impact of the tax on people’s retirement savings and on the markets more generally. Citing a recent Vanguard study, McHenry noted that, with an FTT in place, “a typical mutual find investor would have to work an additional two and a half years to achieve the same retirement goal.”