II 

113TH CONGRESS 

1ST SESSION S. 410 

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

trading transactions. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 28, 2013 

Mr. HARKIN (for himself, Mr. WHITEHOUSE, and Mr. SANDERS) 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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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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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 notional principal contract. 

24 ‘‘(2) DERIVATIVE FINANCIAL INSTRUMENT.— 

25 The term ‘derivative financial instrument’ includes 


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1 any option, forward contract, futures contract, or 

2 any similar financial instrument. 

3 ‘‘(3) NOTIONAL PRINCIPAL CONTRACT.—Except 

4 as otherwise provided by the Secretary, the term ‘no5 tional principal contract’ means any financial instru6 ment which requires two or more payments at speci7 fied intervals calculated by reference to a specified 

8 index upon one or more notional principal amounts. 

9 An amount shall not fail to be treated as a payment 

10 described in the preceding sentence merely because 

11 such amount is fixed on one date and paid or other12 wise taken into account on a different date. 

13 ‘‘(4) SPECIFIED INDEX.—The term ‘specified 

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

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

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

17 ‘‘(C) any index based on any objectively 

18 determinable information (including the occur19 rence or nonoccurrence of any event) which is 

20 not within the control of any of the parties to 

21 the instrument and is not unique to any of the 

22 parties’ circumstances, and 

23 ‘‘(D) any other index as the Secretary may 

24 prescribe. 

25 ‘‘(5) TREATMENT OF EXCHANGES.— 


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

2 treated as the sale of the property transferred 

3 and a purchase of the property received by each 

4 party to the exchange. 

5 ‘‘(B) CERTAIN DEEMED EXCHANGES.—In 

6 the case of a distribution treated as an ex7 change for stock under section 302 or 331, the 

8 corporation making such distribution shall be 

9 treated as having purchased such stock for pur10 poses of this section. 

11 ‘‘(f) EXCEPTIONS.— 

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

13 shall be imposed under subsection (a) on any cov14 ered transaction with respect to the initial issuance 

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

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

17 ‘‘(2) EXCEPTION FOR CERTAIN TRADED SHORT18 TERM INDEBTEDNESS.—A note, bond, debenture, or 

19 other evidence of indebtedness which— 

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

21 in the United States, and 

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

23 than 100 days, 

24 shall not be treated as described in subsection 

25 (e)(1)(C). 


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1 ‘‘(3) EXCEPTION FOR SECURITIES LENDING AR2 RANGEMENTS.—No tax shall be imposed under sub3 section (a) on any covered transaction with respect 

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

5 section 1058. 

6 ‘‘(g) BY WHOM PAID.— 

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

8 section shall be paid by— 

9 ‘‘(A) in the case of a transaction which oc10 curs or is cleared on a facility located in the 

11 United States, such facility, and 

12 ‘‘(B) in the case of a purchase not de13 scribed in subparagraph (A) which is executed 

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

15 which is a United States person, such broker. 

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

17 TRANSACTIONS.—In the case of any transaction to 

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

19 by this section shall be paid by— 

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

21 in subsection (d)(1)— 

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

23 a United States person, and 

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

25 a United States person, and 


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

2 in subsection (d)(2)— 

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

4 States person, and 

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

6 United States person. 

7 ‘‘(h) CERTAIN PAYMENTS TREATED AS SEPARATE

8 TRANSACTIONS.—Except as otherwise provided by the 

9 Secretary, any payment with respect to a security de10 scribed in subparagraph (D), (E), or (F) of subsection 

11 (e)(1) shall be treated as a separate transaction for pur12 poses of this section, including— 

13 ‘‘(1) any net initial payment, net final or termi14 nating payment, or net periodical payment with re15 spect to a notional principal contract (or similar fi16 nancial instrument), 

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

18 contract (or similar financial instrument), and 

19 ‘‘(3) any premium paid with respect to any op20 tion (or similar financial instrument). 

21 ‘‘(i) APPLICATION TO TRANSACTIONS BY CON22 TROLLED FOREIGN CORPORATIONS.— 

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion, a controlled foreign corporation shall be treated 

25 as a United States person. 


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1 ‘‘(2) SPECIAL RULES FOR PAYMENT OF TAX ON

2 DIRECT, ETC., TRANSACTIONS.—In the case of any 

3 transaction which is a covered transaction solely by 

4 reason of paragraph (1) and which is not described 

5 in subsection (g)(1)— 

6 ‘‘(A) PAYMENT BY UNITED STATES SHARE7 HOLDERS.—Any tax which would (but for this 

8 paragraph) be payable under subsection (g)(2) 

9 by the controlled foreign corporation shall, in 

10 lieu thereof, be paid by the United States 

11 shareholders of such controlled foreign corpora12 tion as provided in subparagraph (B). 

13 ‘‘(B) PRO RATA SHARES.—Each such 

14 United States shareholder shall pay the same 

15 proportion of such tax as— 

16 ‘‘(i) the stock which such United 

17 States shareholder owns (within the mean18 ing of section 958(a)) in such controlled 

19 foreign corporation, bears to 

20 ‘‘(ii) the stock so owned by all United 

21 States shareholders in such controlled for22 eign corporation. 

23 ‘‘(C) DEFINITIONS.—For purposes of this 

24 subsection, the terms ‘United States share25 holder’ and ‘controlled foreign corporation’ have 


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1 the meanings given such terms in sections 

2 951(b) and 957(a), respectively. 

3 ‘‘(j) ADMINISTRATION.—The Secretary shall carry 

4 out this section in consultation with the Securities and Ex5 change Commission and the Commodity Futures Trading 

6 Commission. 

7 ‘‘(k) GUIDANCE; REGULATIONS.—The Secretary 

8 shall— 

9 ‘‘(1) provide guidance regarding such informa10 tion reporting concerning covered transactions as the 

11 Secretary deems appropriate, and 

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

13 or appropriate to prevent avoidance of the purposes 

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

15 States persons in such transactions.’’. 

16 (b) CREDIT WITH RESPECT TO CERTAIN TAX-FA17 VORED ACCOUNTS TO OFFSET TRANSACTION TAX.— 

18 (1) IN GENERAL.—Subpart C of part IV of sub19 chapter A of chapter 1 of such Code is amended by 

20 inserting after section 36B the following new sec21 tion: 

22 ‘‘SEC. 36C. OFFSET FOR TRANSACTION TAX WITH RESPECT 

23 TO CERTAIN TAX-FAVORED ACCOUNTS. 

24 ‘‘(a) IN GENERAL.—There shall be allowed as a cred25 it against the tax imposed by this subtitle for the taxable 


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1 year an amount equal to 0.03 percent of the qualified tax2 favored account contributions of the taxpayer for the tax3 able year. 

4 ‘‘(b) QUALIFIED TAX-FAVORED ACCOUNT CON5 TRIBUTIONS.—For purposes of this section, the term 

6 ‘qualified tax-favored account contributions’ means, with 

7 respect to any taxable year, the sum of— 

8 ‘‘(1) with respect to qualified retirement plans 

9 (as defined in section 4974(c)) of the taxpayer, the 

10 amount contributed to such plans for such taxable 

11 year to the extent that such contributions are allow12 able as a deduction or are excludable from gross in13 come (or, in the case of a Roth IRA (as defined in 

14 section 408A(b)), the amount contributed), 

15 ‘‘(2) with respect to Archer MSAs of the tax16 payer, the amount allowed as a deduction under sec17 tion 220 for such taxable year, 

18 ‘‘(3) with respect to health savings accounts of 

19 the taxpayer, the amount allowed as a deduction 

20 under section 223 for such taxable year, plus 

21 ‘‘(4) with respect to qualified tuition programs 

22 (as defined in section 529) and Coverdell education 

23 savings accounts (as defined in section 530) with re24 spect to which the taxpayer is the designated bene25 ficiary (or, in the case of a designated beneficiary 


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1 with respect to whom another taxpayer is allowed a 

2 deduction under section 151, such other taxpayer in 

3 lieu of such designated beneficiary), the amount con4 tributed for such taxable year.’’. 

5 (2) CONFORMING AMENDMENTS.— 

6 (A) Section 1324(b)(2) of title 31, United 

7 States Code, is amended by inserting ‘‘, 36C’’ 

8 after ‘‘36B’’. 

9 (B) The table of sections for subpart C of 

10 part IV of subchapter A of chapter 1 of the In11 ternal Revenue Code of 1986 is amended by in12 serting before the item relating to section 37 

13 the following new item: 

‘‘Sec. 36C. Offset for transaction tax on contributions to certain tax-favored accounts.’’. 

14 (c) INFORMATION REPORTING WITH RESPECT TO

15 CONTROLLED FOREIGN CORPORATIONS.—Subparagraph 

16 (B) of section 6038(a)(1) is amended by inserting ‘‘and 

17 transactions which are covered transactions for purposes 

18 of section 4475 by reason of the application of section 

19 4475(i)(1) to such corporation’’ before the semicolon at 

20 the end. 

21 (d) CLERICAL AMENDMENT.—The table of sub22 chapters for chapter 36 of the Internal Revenue Code of 


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1 1986 is amended by inserting after the item relating to 

2 subchapter B the following new item: 

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

3 (e) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to transactions after December 31, 

5 2013. 

Æ 


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