I 
114TH CONGRESS 
2D SESSION 
H. R. 5745 
To amend the Internal Revenue Code of 1986 to impose a tax on certain 
trading transactions. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 13, 2016 
Mr. DEFAZIO introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to impose 
a tax on certain trading transactions. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Putting Main Street 
FIRST Act’’ or as the ‘‘Putting Main Street FIRST: Fin-
ishing Irresponsible Reckless Speculative Trading Act’’. 
SEC. 2. TRANSACTION TAX. 
(a) IN GENERAL.—Chapter 36 of the Internal Rev-
enue Code of 1986 is amended by inserting after sub-
chapter B the following new subchapter: 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘Subchapter C—Tax on Trading Transactions 
‘‘Sec. 4475. Tax on trading transactions. 
‘‘SEC. 4475. TAX ON TRADING TRANSACTIONS. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 
a tax on each covered transaction with respect to any secu-
rity. 
‘‘(b) RATE OF TAX.—The tax imposed under sub-
section (a) with respect to any covered transaction shall 
be 0.03 percent of the specified base amount with respect 
to such covered transaction. 
‘‘(c) SPECIFIED BASE AMOUNT.—For purposes of 
this section, the term ‘specified base amount’ means— 
‘‘(1) except as provided in paragraph (2), the 
fair market value of a security (determined as of the 
time of the covered transaction), and 
‘‘(2) in the case of any payment with respect to 
a derivative, the amount of such payment. 
‘‘(d) COVERED TRANSACTION.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘covered trans-
action’ means— 
‘‘(A) except as provided in subparagraph 
(B), any purchase if— 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(i) such purchase occurs on, or is 
subject to the rules of, a qualified board or 
exchange located in the United States, or 
‘‘(ii) the purchaser or seller is a 
United States person, and 
‘‘(B) any transaction with respect to a de-
rivative if— 
‘‘(i) such derivative is traded on, or is 
subject to the rules of, a qualified board or 
exchange located in the United States, or 
‘‘(ii) any party with rights under such 
derivative is a United States person. 
‘‘(2) EXCEPTIONS FROM TAX.— 
‘‘(A) EXCEPTION FOR INITIAL ISSUES.— 
No tax shall be imposed under subsection (a) 
on any covered transaction with respect to the 
initial issuance of any security described in sub-
paragraph (A), (B), or (C) of subsection (e)(1). 
‘‘(B) EXCEPTION
FOR
CERTAIN
TRADED 
SHORT-TERM
INDEBTEDNESS.—A note, bond, 
debenture, or other evidence of indebtedness 
which— 
‘‘(i) is traded on, or is subject to the 
rules of, a qualified board or exchange lo-
cated in the United States, and 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(ii) has a fixed maturity of not more 
than 100 days, 
shall not be treated as described in subsection 
(e)(1)(C). 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) SECURITY.—The term ‘security’ means— 
‘‘(A) any share of stock in a corporation, 
‘‘(B) any partnership or beneficial owner-
ship interest in a partnership or trust, 
‘‘(C) any note, bond, debenture, or other 
evidence of indebtedness, and 
‘‘(D) any derivative. 
‘‘(2) DERIVATIVE.— 
‘‘(A) IN GENERAL.—The term ‘derivative’ 
means any contract (including any option, for-
ward contract, futures contract, short position, 
swap, or similar contract) the value of which, or 
any payment or other transfer with respect to 
which, is (directly or indirectly) determined by 
reference to one or more of the following: 
‘‘(i) Any security described in sub-
paragraph (A), (B), or (C) of paragraph 
(1). 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(ii) Any commodity which is actively 
traded (within the meaning of section 
1092(d)(1)). 
‘‘(iii) Any currency. 
‘‘(iv) Any rate, price, amount, index, 
formula, or algorithm. 
‘‘(v) Any other item as the Secretary 
may prescribe. 
Such term shall not include any item described 
in clauses (i) through (v). 
‘‘(B) EXCEPTIONS FROM TREATMENT AS 
DERIVATIVES.— 
‘‘(i) SECURITIES LENDING, SALE-RE-
PURCHASE, 
AND
SIMILAR
FINANCING 
TRANSACTIONS.—To the extent provided 
by the Secretary, the term ‘derivative’ shall 
not include the right to the return of the 
same or substantially identical securities 
transferred in a securities lending trans-
action, 
sale-repurchase 
transaction, 
or 
similar financing transaction. 
‘‘(ii) INSURANCE CONTRACTS, ANNU-
ITIES, AND ENDOWMENTS.—The term ‘de-
rivative’ shall not include any insurance, 
annuity, or endowment contract issued by 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
an insurance company to which subchapter 
L applies (or issued by any foreign cor-
poration to which such subchapter would 
apply if such foreign corporation were a 
domestic corporation). 
‘‘(3) QUALIFIED BOARD OR EXCHANGE.—The 
term ‘qualified board or exchange’ has the meaning 
given such term by section 1256(g)(7). 
‘‘(f) BY WHOM PAID.— 
‘‘(1) IN GENERAL.—The tax imposed by this 
section shall be paid by— 
‘‘(A) in the case of a transaction which oc-
curs on, or is subject to the rules of, a qualified 
board or exchange located in the United States, 
such qualified board or exchange, and 
‘‘(B) in the case of a purchase not de-
scribed in subparagraph (A) which is executed 
by a broker (as defined in section 6045(c)(1)) 
which is a United States person, such broker. 
‘‘(2) SPECIAL
RULES
FOR
DIRECT, 
ETC., 
TRANSACTIONS.—In the case of any transaction to 
which paragraph (1) does not apply, the tax imposed 
by this section shall be paid by— 
‘‘(A) in the case of a transaction described 
in subsection (d)(1)(A)— 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(2) PAYMENTS
WITH
RESPECT
TO
DERIVA-
TIVES TREATED AS SEPARATE TRANSACTIONS.—Ex-
cept as otherwise provided by the Secretary, any 
payment with respect any derivative shall be treated 
as a separate transaction for purposes of this sec-
tion. 
‘‘(h) APPLICATION
TO
TRANSACTIONS
BY
CON-
TROLLED FOREIGN CORPORATIONS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a controlled foreign corporation shall be treated 
as a United States person. 
‘‘(2) SPECIAL RULES FOR PAYMENT OF TAX ON 
DIRECT, ETC., TRANSACTIONS.—In the case of any 
transaction which is a covered transaction solely by 
reason of paragraph (1) and which is not described 
in subsection (f)(1)— 
‘‘(A) PAYMENT BY UNITED STATES SHARE-
HOLDERS.—Any tax which would (but for this 
paragraph) be payable under subsection (f)(2) 
by the controlled foreign corporation shall, in 
lieu thereof, be paid by the United States 
shareholders of such controlled foreign corpora-
tion as provided in subparagraph (B). 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(B) PRO
RATA
SHARES.—Each such 
United States shareholder shall pay the same 
proportion of such tax as— 
‘‘(i) the stock which such United 
States shareholder owns (within the mean-
ing of section 958(a)) in such controlled 
foreign corporation, bears to 
‘‘(ii) the stock so owned by all United 
States shareholders in such controlled for-
eign corporation. 
‘‘(C) DEFINITIONS.—For purposes of this 
subsection, the terms ‘United States share-
holder’ and ‘controlled foreign corporation’ have 
the meanings given such terms in sections 
951(b) and 957(a), respectively. 
‘‘(i) ADMINISTRATION.—The Secretary shall carry 
out this section in consultation with the Securities and Ex-
change Commission and the Commodity Futures Trading 
Commission. 
‘‘(j) GUIDANCE; REGULATIONS.—The Secretary 
shall— 
‘‘(1) provide guidance regarding such informa-
tion reporting concerning covered transactions as the 
Secretary deems appropriate, and 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
‘‘(2) prescribe such regulations as are necessary 
or appropriate to prevent avoidance of the purposes 
of this section, including the use of non-United 
States persons in such transactions.’’. 
(b) CREDIT WITH RESPECT TO CERTAIN TAX-FA-
VORED ACCOUNTS TO OFFSET TRANSACTION TAX.—Sub-
part C of part IV of subchapter A of chapter 1 of such 
Code is amended by inserting after section 36B the fol-
lowing new section: 
‘‘SEC. 36C. OFFSET FOR TRANSACTION TAX WITH RESPECT 
TO CERTAIN TAX-FAVORED ACCOUNTS. 
‘‘(a) IN GENERAL.—There shall be allowed as a cred-
it against the tax imposed by this subtitle for the taxable 
year an amount equal to 0.03 percent of the qualified tax- 
favored account contributions of the taxpayer for the tax-
able year. 
‘‘(b) QUALIFIED
TAX-FAVORED
ACCOUNT
CON-
TRIBUTIONS.—For purposes of this section, the term 
‘qualified tax-favored account contributions’ means, with 
respect to any taxable year, the sum of— 
‘‘(1) with respect to qualified retirement plans 
(as defined in section 4974(c)) of the taxpayer, the 
amount contributed to such plans for such taxable 
year to the extent that such contributions are allow-
able as a deduction or are excludable from gross in-
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
come (or, in the case of a Roth IRA (as defined in 
section 408A(b)), the amount contributed), 
‘‘(2) with respect to Archer MSAs of the tax-
payer, the amount allowed as a deduction under sec-
tion 220 for such taxable year, 
‘‘(3) with respect to health savings accounts of 
the taxpayer, the amount allowed as a deduction 
under section 223 for such taxable year, plus 
‘‘(4) with respect to qualified tuition programs 
(as defined in section 529), qualified ABLE pro-
grams (as defined in section 529A), and Coverdell 
education savings accounts (as defined in section 
530), with respect to which the taxpayer is the des-
ignated beneficiary (or, in the case of a designated 
beneficiary with respect to whom another taxpayer is 
allowed a deduction under section 151, such other 
taxpayer in lieu of such designated beneficiary), the 
amount contributed for such taxable year.’’. 
(c) INFORMATION REPORTING WITH RESPECT TO 
CONTROLLED
FOREIGN
CORPORATIONS.—Section 
6038(a)(1)(B) of such Code is amended by inserting ‘‘and 
transactions which are covered transactions for purposes 
of section 4475 by reason of the application of section 
4475(h)(1) to such corporation’’ before the semicolon at 
the end. 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS
(d) CONFORMING AMENDMENTS.— 
(1) Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ‘‘, 36C’’ after 
‘‘36B’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting before 
the item relating to section 37 the following new 
item: 
‘‘Sec. 36C. Offset for transaction tax on contributions to certain tax-favored ac-
counts.’’. 
(3) The table of subchapters for chapter 36 of 
such Code is amended by inserting after the item re-
lating to subchapter B the following new item: 
‘‘Subchapter C. Tax on trading transactions.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions after December 31, 
2017. 
Æ 
VerDate Sep 11 2014 
02:19 Jul 21, 2016
Jkt 059200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6301
E:\BILLS\H5745.IH
H5745
rfrederick on DSK6VPTVN1PROD with BILLS