II 

112TH CONGRESS 

1ST SESSION S. 1787 

To amend the Internal Revenue Code of 1986 to impose a tax on certain 

trading transactions. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 2, 2011 

Mr. HARKIN (for himself, Mr. SANDERS, and Mr. BROWN of Ohio) introduced 

the following bill; which was read twice and referred to the Committee 

on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to impose 

a tax on certain trading transactions. 

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 ‘‘Wall Street Trading 

5 and Speculators Tax Act’’. 

6 SEC. 2. TRANSACTION TAX. 

7 (a) IN GENERAL.—Chapter 36 of the Internal Rev8 enue Code of 1986 is amended by inserting after sub9 chapter B the following new subchapter: 


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•S 1787 IS

1 ‘‘Subchapter C—Tax on Trading Transactions 

‘‘Sec. 4475. Tax on trading transactions. 

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

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

4 a tax on each covered transaction with respect to any secu5 rity. 

6 ‘‘(b) RATE OF TAX.—The tax imposed under sub7 section (a) with respect to any covered transaction shall 

8 be 0.03 percent of the specified base amount with respect 

9 to such covered transaction. 

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

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

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

13 fair market value of the security (determined as of 

14 the time of the covered transaction), and 

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

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

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

18 section, the term ‘covered transaction’ means— 

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

20 purchase if— 

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

22 a facility located in the United States, or 

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

24 States person, and 


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•S 1787 IS

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

2 described in subparagraph (D), (E), or (F) of sub3 section (e)(1), if— 

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

5 a facility located in the United States, or 

6 ‘‘(B) any party with rights under such se7 curity is a United States person. 

8 ‘‘(e) SECURITY AND OTHER DEFINITIONS.—For pur9 poses of this section— 

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

11 means— 

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

13 ‘‘(B) any partnership or beneficial owner14 ship interest in a partnership or trust, 

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

16 evidence of indebtedness, 

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

18 derivative financial instrument with respect to, 

19 any security or securities described in subpara20 graph (A), (B), or (C), 

21 ‘‘(E) any derivative financial instrument 

22 with respect to any currency or commodity, and 

23 ‘‘(F) any other derivative financial instru24 ment any payment with respect to which is cal25 culated by reference to any specified index. 


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1 ‘‘(2) DERIVATIVE FINANCIAL INSTRUMENT.— 

2 The term ‘derivative financial instrument’ includes 

3 any option, forward contract, futures contract, no4 tional principal contract, or any similar financial in5 strument. 

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

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

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

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

10 which is based on any current objectively deter11 minable information which is not within the control 

12 of any of the parties to the contract or instrument 

13 and is not unique to any of the parties’ cir14 cumstances. 

15 ‘‘(4) TREATMENT OF EXCHANGES.— 

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

17 treated as the sale of the property transferred 

18 and a purchase of the property received by each 

19 party to the exchange. 

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

21 the case of a distribution treated as an ex22 change for stock under section 302 or 331, the 

23 corporation making such distribution shall be 

24 treated as having purchased such stock for pur25 poses of this section. 


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•S 1787 IS

1 ‘‘(f) EXCEPTIONS.— 

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

3 shall be imposed under subsection (a) on any cov4 ered transaction with respect to the initial issuance 

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

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

7 ‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT8 TERM INDEBTEDNESS.—A note, bond, debenture, or 

9 other evidence of indebtedness which— 

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

11 in the United States, and 

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

13 than 100 days, 

14 shall not be treated as described in subsection 

15 (e)(1)(C). 

16 ‘‘(3) EXCEPTION FOR SECURITIES LENDING AR17 RANGEMENTS.—No tax shall be imposed under sub18 section (a) on any covered transaction with respect 

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

20 section 1058. 

21 ‘‘(g) BY WHOM PAID.— 

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

23 section shall be paid by— 


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•S 1787 IS

1 ‘‘(A) in the case of a transaction which oc2 curs or is cleared on a facility located in the 

3 United States, such facility, and 

4 ‘‘(B) in the case of a purchase not de5 scribed in subparagraph (A) which is executed 

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

7 which is a United States person, such broker. 

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

9 TRANSACTIONS.—In the case of any transaction to 

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

11 by this section shall be paid by— 

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

13 in subsection (d)(1)— 

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

15 a United States person, and 

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

17 a United States person, and 

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

19 in subsection (d)(2)— 

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

21 States person, and 

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

23 United States person. 

24 ‘‘(h) CERTAIN PAYMENTS TREATED AS SEPARATE

25 TRANSACTIONS.—Except as otherwise provided by the 


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•S 1787 IS

1 Secretary, any payment with respect to a security de2 scribed in subparagraph (D), (E), or (F) of subsection 

3 (e)(1) shall be treated as a separate transaction for pur4 poses of this section, including— 

5 ‘‘(1) any net initial payment, net final or termi6 nating payment, or net periodical payment with re7 spect to a notional principal contract (or similar fi8 nancial instrument), 

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

10 contract (or similar financial instrument), and 

11 ‘‘(3) any premium paid with respect to any op12 tion (or similar financial instrument). 

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

14 out this section in consultation with the Securities and Ex15 change Commission and the Commodity Futures Trading 

16 Commission. 

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

18 shall— 

19 ‘‘(1) provide guidance regarding such informa20 tion reporting concerning covered transactions as the 

21 Secretary deems appropriate, and 

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

23 or appropriate to prevent avoidance of the purposes 

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

25 States persons in such transactions.’’. 


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•S 1787 IS

1 (b) CLERICAL AMENDMENT.—The table of sub2 chapters for chapter 36 of the Internal Revenue Code of 

3 1986 is amended by inserting after the item relating to 

4 subchapter B the following new item: 

‘‘Subchapter C. Tax on trading transactions.’’. 

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

6 this section shall apply to transactions after December 31, 

7 2012. 

Æ 


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