I 

113TH CONGRESS 

1ST SESSION H. R. 1579 

To impose a tax on certain trading transactions to strengthen our financial 

security, reduce market volatility, expand opportunity, and stop shrinking 

the middle class. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 16, 2013 

Mr. ELLISON (for himself, Mr. BLUMENAUER, Ms. CHU, Mr. CONYERS, Ms. 

EDWARDS, Mr. GRIJALVA, Ms. LEE of California, Mr. MCGOVERN, and 

Ms. NORTON) introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To impose a tax on certain trading transactions to strengthen our financial security, reduce market volatility, expand 

opportunity, and stop shrinking the middle class. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Inclusive Prosperity 

5 Act of 2013’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) The global financial crisis cost Americans 

2 $19 trillion in lost wealth. 

3 (2) The global financial crisis was caused by fi4 nancial firms taking great financial risks without 

5 disclosing those risks to their investors or their regu6 lators, and by regulatory failures to adequately po7 lice the financial services markets for crime, unfair 

8 or deceptive practices, fraud, lack of transparency, 

9 and mismanagement. 

10 (3) Deceptive, illegal, and speculative financial 

11 practices have harmed public confidence in the integ12 rity and fairness of many United States financial in13 stitutions, and threaten the basic strengths of the 

14 United States economic system. 

15 (4) American citizens provided the money to 

16 stabilize the financial sector, making $600 billion 

17 available to 800 financial institutions, automakers, 

18 and insurance companies. 

19 (5) The global financial crisis, along with the 

20 wars, unabated and unaddressed climate change, 

21 unsustainable tax cuts, and a continuing unemploy22 ment crisis, if unaddressed, will deprive a generation 

23 of a meaningful role in the larger economy. 

24 (6) Nurses, teachers, public safety officers, and 

25 other public sector workers have faced drastic fundVerDate Mar 15 2010 03:26 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579

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1 ing cuts, harming our long-term public safety and 

2 prospects for economic growth. 

3 (7) Extreme weather events rooted in climate 

4 change, including flood, drought, fire, super storms 

5 like Sandy, as well as ‘‘slow-onset’’ events like sea 

6 level rise, are wreaking havoc in the United States 

7 and across the globe resulting in climate change im8 pacts that jeopardize the lives and livelihoods of 

9 Americans, causing large-scale food and energy inse10 curity in developing countries, and extolling untold 

11 economic costs. 

12 (8) According to economists, a small tax on 

13 transfer of ownership of every financial trade could 

14 generate hundreds of billions annually in revenue, 

15 which when invested could help create sufficient jobs 

16 in both the public and private sectors to replace the 

17 8 million jobs lost in the recent recession and add 

18 even more jobs on an ongoing basis, as well as pro19 vide urgently needed funding for programs to com20 bat climate change and address global health and 

21 development issues. 

22 (9) A transactions tax will help limit high fre23 quency trading which may be as high as 70 percent 

24 of the market and results in declining market sta25 bility through extreme price volatility, distorted marVerDate Mar 15 2010 03:26 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579

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1 ket prices, and structural vulnerability to speculation 

2 far in excess of the liquidity needs of commercial 

3 hedgers. 

4 (10) A securities transfer tax would have a neg5 ligible impact on the average investor. 

6 (11) The United States had a transfer tax from 

7 1914 to 1966: The Revenue Act of 1914 (Act of 

8 Oct. 22, 1914 (ch. 331, 38 Stat. 745)) levied a 0.2 

9 percent tax on all sales or transfers of stock which 

10 was doubled in 1932 to help overcome the budgetary 

11 challenges during the Great Depression. 

12 (12) Forty nations have or have had some form 

13 of a financial transactions tax; it is endorsed by 

14 more than 1,000 economists; and 11 European 

15 countries are moving forward on implementing a co16 ordinated financial transactions tax after European 

17 Union finance ministers signaled approval in Janu18 ary 2013. 

19 (13) Revenue generated by this tax will be 

20 available to— 

21 (A) strengthen financial security and ex22 pand opportunity for low- and moderate-income 

23 families, including strengthening the social safe24 ty net and expanding resources for child care, 

25 Social Security, and savings incentives; and 


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1 (B) expand resources for State and Fed2 eral investments that protect our health and en3 vironment, investing in water and wastewater 

4 infrastructure, rebuild our crumbling physical 

5 infrastructure, and create good paying jobs 

6 by— 

7 (i) expanding and improving Medicare 

8 and Medicaid; 

9 (ii) investing in education, student 

10 debt relief, job training, public sector jobs, 

11 and green jobs; 

12 (iii) providing housing assistance to 

13 low-income households; 

14 (iv) investing in transportation includ15 ing public mass transit and an infrastruc16 ture bank that promotes environmentally 

17 responsible domestic manufacturing and 

18 construction industries; and 

19 (v) protecting our environment and 

20 building a clean energy economy, including 

21 efforts to combat climate change and build 

22 resilience to its effects in the United States 

23 and in developing countries; and 

24 (C) fund international sustainable pros25 perity programs such as health care investVerDate Mar 15 2010 03:26 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579

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1 ments, AIDS treatment, research and preven2 tion programs, climate change adaptation and 

3 mitigation efforts by developing countries, and 

4 international assistance. 

5 SEC. 3. TRANSACTION TAX. 

6 (a) IN GENERAL.—Chapter 36 of the Internal Rev7 enue Code of 1986 is amended by inserting after sub8 chapter B the following new subchapter: 

9 ‘‘Subchapter C—Tax on Trading Transactions 

‘‘Sec. 4475. Tax on trading transactions. 

10 ‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 

11 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 

12 a tax on the transfer of ownership in each covered trans13 action with respect to any security. 

14 ‘‘(b) RATE OF TAX.—The tax imposed under sub15 section (a) with respect to any covered transaction shall 

16 be the applicable percentage of the specified base amount 

17 with respect to such covered transaction. The applicable 

18 percentage shall be— 

19 ‘‘(1) 0.5 percent in the case of a security de20 scribed in subparagraph (A) or (B) of subsection 

21 (e)(1), 

22 ‘‘(2) 0.10 percent in the case of a security de23 scribed in subparagraph (C) of subsection (e)(1), 

24 and 


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1 ‘‘(3) 0.005 percent in the case of a security de2 scribed in subparagraph (D), (E), or (F) of sub3 section (e)(1). 

4 ‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 

5 this section, the term ‘specified base amount’ means— 

6 ‘‘(1) except as provided in paragraph (2), the 

7 fair market value of the security (determined as of 

8 the time of the covered transaction), and 

9 ‘‘(2) in the case of any payment described in 

10 subsection (h), the amount of such payment. 

11 ‘‘(d) COVERED TRANSACTION.—For purposes of this 

12 section, the term ‘covered transaction’ means— 

13 ‘‘(1) except as provided in paragraph (2), any 

14 purchase if— 

15 ‘‘(A) such purchase occurs or is cleared on 

16 a facility located in the United States, or 

17 ‘‘(B) the purchaser or seller is a United 

18 States person, and 

19 ‘‘(2) any transaction with respect to a security 

20 described in subparagraph (D), (E), or (F) of sub21 section (e)(1), if— 

22 ‘‘(A) such security is traded or cleared on 

23 a facility located in the United States, or 

24 ‘‘(B) any party with rights under such se25 curity is a United States person. 


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1 ‘‘(e) SECURITY AND OTHER DEFINITIONS.—For pur2 poses of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘security’ 

4 means— 

5 ‘‘(A) any share of stock in a corporation, 

6 ‘‘(B) any partnership or beneficial owner7 ship interest in a partnership or trust, 

8 ‘‘(C) any note, bond, debenture, or other 

9 evidence of indebtedness, other than a State or 

10 local bond the interest of which is excluded 

11 from gross income under section 103(a), 

12 ‘‘(D) any evidence of an interest in, or a 

13 derivative financial instrument with respect to, 

14 any security or securities described in subpara15 graph (A), (B), or (C), 

16 ‘‘(E) any derivative financial instrument 

17 with respect to any currency or commodity in18 cluding notional principal contracts, and 

19 ‘‘(F) any other derivative financial instru20 ment any payment with respect to which is cal21 culated by reference to any specified index. 

22 ‘‘(2) DERIVATIVE FINANCIAL INSTRUMENT.— 

23 The term ‘derivative financial instrument’ includes 

24 any option, forward contract, futures contract, noVerDate Mar 15 2010 03:26 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1579.IH H1579

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1 tional principal contract, or any similar financial in2 strument. 

3 ‘‘(3) SPECIFIED INDEX.—The term ‘specified 

4 index’ means any 1 or more of any combination of— 

5 ‘‘(A) a fixed rate, price, or amount, or 

6 ‘‘(B) a variable rate, price, or amount, 

7 which is based on any current objectively deter8 minable information which is not within the 

9 control of any of the parties to the contract or 

10 instrument and is not unique to any of the par11 ties’ circumstances. 

12 ‘‘(4) TREATMENT OF EXCHANGES.— 

13 ‘‘(A) IN GENERAL.—An exchange shall be 

14 treated as the sale of the property transferred 

15 and a purchase of the property received by each 

16 party to the exchange. 

17 ‘‘(B) CERTAIN DEEMED EXCHANGES.—In 

18 the case of a distribution treated as an ex19 change for stock under section 302 or 331, the 

20 corporation making such distribution shall be 

21 treated as having purchased such stock for pur22 poses of this section. 

23 ‘‘(f) EXCEPTIONS.— 

24 ‘‘(1) EXCEPTION FOR INITIAL ISSUES.—No tax 

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1 ered transaction with respect to the initial issuance 

2 of any security described in subparagraph (A), (B), 

3 or (C) of subsection (e)(1). 

4 ‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT5 TERM INDEBTEDNESS.—A note, bond, debenture, or 

6 other evidence of indebtedness which— 

7 ‘‘(A) is traded on a trading facility located 

8 in the United States, and 

9 ‘‘(B) has a fixed maturity of not more 

10 than 60 days, 

11 shall not be treated as described in subsection 

12 (e)(1)(C). 

13 ‘‘(3) EXCEPTION FOR SECURITIES LENDING AR14 RANGEMENTS.—No tax shall be imposed under sub15 section (a) on any covered transaction with respect 

16 to which gain or loss is not recognized by reason of 

17 section 1058. 

18 ‘‘(g) BY WHOM PAID.— 

19 ‘‘(1) IN GENERAL.—The tax imposed by this 

20 section shall be paid by— 

21 ‘‘(A) in the case of a transaction which oc22 curs or is cleared on a facility located in the 

23 United States, such facility, and 

24 ‘‘(B) in the case of a purchase not de25 scribed in subparagraph (A) which is executed 


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1 by a broker (as defined in section 6045(c)(1)), 

2 the broker. 

3 ‘‘(2) SPECIAL RULES FOR DIRECT, ETC., 

4 TRANSACTIONS.—In the case of any transaction to 

5 which paragraph (1) does not apply, the tax imposed 

6 by this section shall be paid by— 

7 ‘‘(A) in the case of a transaction described 

8 in subsection (d)(1)— 

9 ‘‘(i) the purchaser if the purchaser is 

10 a United States person, and 

11 ‘‘(ii) the seller if the purchaser is not 

12 a United States person, and 

13 ‘‘(B) in the case of a transaction described 

14 in subsection (d)(2)— 

15 ‘‘(i) the payor if the payor is a United 

16 States person, and 

17 ‘‘(ii) the payee if the payor is not a 

18 United States person. 

19 ‘‘(h) CERTAIN PAYMENTS TREATED AS SEPARATE

20 TRANSACTIONS.—Except as otherwise provided by the 

21 Secretary, any payment with respect to a security de22 scribed in subparagraph (D), (E), or (F) of subsection 

23 (e)(1) shall be treated as a separate transaction for pur24 poses of this section, including— 


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1 ‘‘(1) any net initial payment, net final or termi2 nating payment, or net periodical payment with re3 spect to a notional principal contract (or similar fi4 nancial instrument), 

5 ‘‘(2) any payment with respect to any forward 

6 contract (or similar financial instrument), and 

7 ‘‘(3) any premium paid with respect to any op8 tion (or similar financial instrument). 

9 ‘‘(i) ADMINISTRATION.—The Secretary shall carry 

10 out this section in consultation with the Securities and Ex11 change Commission and the Commodity Futures Trading 

12 Commission. 

13 ‘‘(j) GUIDANCE; REGULATIONS.—The Secretary 

14 shall— 

15 ‘‘(1) provide guidance regarding such informa16 tion reporting concerning covered transactions as the 

17 Secretary deems appropriate, including reporting by 

18 the payor of the tax in cases where the payor is not 

19 the purchaser, and 

20 ‘‘(2) prescribe such regulations as are necessary 

21 or appropriate to prevent avoidance of the purposes 

22 of this section, including the use of non-United 

23 States persons in such transactions. 

24 ‘‘(k) WHISTLEBLOWERS.—See section 7623 for pro25 visions relating to whistleblowers.’’. 


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1 (b) PENALTY FOR FAILURE TO INCLUDE COVERED

2 TRANSACTION INFORMATION WITH RETURN.—Part I of 

3 subchapter B of chapter 68 of the Internal Revenue Code 

4 of 1986 is amended by inserting after section 6707A the 

5 following new section: 

6 ‘‘SEC. 6707B. PENALTY FOR FAILURE TO INCLUDE COV7 ERED TRANSACTION INFORMATION WITH RE8 TURN. 

9 ‘‘(a) IMPOSITION OF PENALTY.—Any person who 

10 fails to include on any return or statement any informa11 tion with respect to a covered transaction which is re12 quired pursuant to section 4475(j)(1) to be included with 

13 such return or statement shall pay a penalty in the 

14 amount determined under subsection (b). 

15 ‘‘(b) AMOUNT OF PENALTY.—Except as otherwise 

16 provided in this subsection, the amount of the penalty 

17 under subsection (a) with respect to any covered trans18 action shall be determined by the Secretary. 

19 ‘‘(c) COVERED TRANSACTION.—For purposes of this 

20 section, the term ‘covered transaction’ has the meaning 

21 given such term by section 4475(d). 

22 ‘‘(d) AUTHORITY TO RESCIND PENALTY.— 

23 ‘‘(1) IN GENERAL.—The Commissioner of In24 ternal Revenue may rescind all or any portion of any 

25 penalty imposed by this section with respect to any 


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1 violation if rescinding the penalty would promote 

2 compliance with the requirements of this title and 

3 effective tax administration. 

4 ‘‘(2) NO JUDICIAL APPEAL.—Notwithstanding 

5 any other provision of law, any determination under 

6 this subsection may not be reviewed in any judicial 

7 proceeding. 

8 ‘‘(3) RECORDS.—If a penalty is rescinded under 

9 paragraph (1), the Commissioner shall place in the 

10 file in the Office of the Commissioner the opinion of 

11 the Commissioner with respect to the determination, 

12 including— 

13 ‘‘(A) a statement of the facts and cir14 cumstances relating to the violation, 

15 ‘‘(B) the reasons for the rescission, and 

16 ‘‘(C) the amount of the penalty rescinded. 

17 ‘‘(e) COORDINATION WITH OTHER PENALTIES.—The 

18 penalty imposed by this section shall be in addition to any 

19 other penalty imposed by this title.’’. 

20 (c) CLERICAL AMENDMENTS.— 

21 (1) The table of sections for part I of sub22 chapter B of chapter 68 of such Code is amended 

23 by inserting after item relating to section 6707A the 

24 following new item: 

‘‘Sec. 6707B. Penalty for failure to include covered transaction information 

with return.’’. 


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1 (2) The table of subchapters for chapter 36 of 

2 the Internal Revenue Code of 1986 is amended by 

3 inserting after the item relating to subchapter B the 

4 following new item: 

‘‘SUBCHAPTER C. TAX ON TRADING TRANSACTIONS.’’. 

5 (d) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to transactions after December 31, 

7 2013. 

8 SEC. 4. OFFSETTING CREDIT FOR FINANCIAL TRANS9 ACTION TAX. 

10 (a) IN GENERAL.—Subpart A of part IV of sub11 chapter A of chapter 1 of the Internal Revenue Code of 

12 1986 (relating to nonrefundable personal credits) is 

13 amended by inserting after section 25D the following new 

14 section: 

15 ‘‘SEC. 25E. FINANCIAL TRANSACTION TAX PAYMENTS. 

16 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in17 dividual, there shall be allowed as a credit against the tax 

18 imposed by this chapter for the taxable year an amount 

19 equal to the tax paid during the taxable year under section 

20 4475. 

21 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

22 GROSS INCOME.— 

23 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

24 apply to a taxpayer for the taxable year if the modi25 fied adjusted gross income of the taxpayer for the 


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1 taxable year exceeds $50,000 ($75,000 in the case 

2 of a joint return and one-half of such amount in the 

3 case of a married individual filing a separate re4 turn). 

5 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.— 

6 For purposes of paragraph (1), the term ‘modified 

7 adjusted gross income’ means adjusted gross in8 come— 

9 ‘‘(A) determined without regard to sections 

10 86, 893, 911, 931, and 933, and 

11 ‘‘(B) increased by the amount of interest 

12 received or accrued by the taxpayer during the 

13 taxable year which is exempt from tax. 

14 ‘‘(3) INFLATION ADJUSTMENT.— 

15 ‘‘(A) IN GENERAL.—In the case of any 

16 taxable year beginning after 2014, each dollar 

17 amount referred to in paragraph (1) shall be in18 creased by an amount equal to— 

19 ‘‘(i) such dollar amount, multiplied by 

20 ‘‘(ii) the cost-of-living adjustment de21 termined under section (1)(f)(3) of the In22 ternal Revenue Code of 1986 for the cal23 endar year in which the taxable year be24 gins, by substituting ‘2013’ for ‘1992’. 


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1 ‘‘(B) ROUNDING.—If any amount as ad2 justed under clause (i) is not a multiple of $50, 

3 such amount shall be rounded to the nearest 

4 multiple of $50. 

5 ‘‘(c) ELIGIBLE INDIVIDUAL.— 

6 ‘‘(1) IN GENERAL.—The term ‘eligible indi7 vidual’ means, with respect to any taxable year, an 

8 individual who— 

9 ‘‘(A) has attained the age of 18 as of the 

10 last day of such taxable year, and 

11 ‘‘(B) is a citizen or lawful permanent resi12 dent (within the meaning of section 7701(b)(6)) 

13 as of the last day of such taxable year. 

14 ‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.— 

15 For purposes of paragraph (1), an individual de16 scribed in any of the following provisions of this title 

17 for the preceding taxable year shall not be treated 

18 as an eligible individual for the taxable year: 

19 ‘‘(A) An individual who is a student (as 

20 defined in section 152(f)(2)) for the taxable 

21 year or the immediately preceding taxable year. 

22 ‘‘(B) An individual who is a taxpayer de23 scribed in subsection (c), (d), or (e) of section 

24 6402 for the immediately preceding taxable 

25 year. 


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1 ‘‘(C) A married individual who files a sepa2 rate return for the taxable year.’’. 

3 (b) CLERICAL AMENDMENT.—The table of sections 

4 for subpart A of part IV of subchapter A of chapter 1 

5 of such Code is amended by inserting after the item relat6 ing to section 25D the following new item: 

‘‘Sec. 25E. Financial transaction tax payments.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2013. 

Æ 


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