Protecting Retirement Savers and Everyday Investors Act
Bill: H.R.1584 | Sponsor: Rep. McHenry, Patrick T. (R-NC)
Policy area: Finance and Financial Sector

Summary:
Protecting Retirement Savers and Everyday Investors Act
This bill prohibits states and local governments from imposing taxes upon a securities industry participant based on the number, volume, or value of securities transactions processed or consummated by the participant, with exceptions.

To impose a limitation on taxation and fees on transactions by certain 
       securities industry participants, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Protecting Retirement Savers and 
Everyday Investors Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The United States capital markets are sophisticated, 
        complex, diverse, and highly interconnected interstate 
        marketplaces that effect and process millions of trades daily 
        for the benefit of individual and institutional investors 
        throughout the United States, including the retirement accounts 
        of union members, pensioners, teachers, policemen, firemen, 
        first responders, and other working Americans, as well as the 
        endowments of colleges and universities and charitable 
        organizations.
            (2) The United States capital markets are the deepest, most 
        liquid markets in the world in large measure because of the low 
        transaction costs that investors pay to trade securities.
            (3) Under the Federal securities laws, the Securities and 
        Exchange Commission serves as the primary supervisor and 
        regulator of the United States capital markets (with the 
        assistance of other Federal regulators), while under State 
        securities laws, State regulators serve a secondary function of 
        helping to protect investors with respect to securities offered 
        and sold within their States.
            (4) Also pursuant to the Federal securities laws, Congress 
        directs the Securities and Exchange Commission to assess 
        transaction fees upon the United States capital markets that 
        are designed to recover the Commission's costs of supervising 
        and regulating the United States capital markets.
            (5) Some States have proposed taxes and fees that are based 
        on securities transactions and processing activity related 
        thereto from investors from other States and would raise costs 
        for all United States investors, even investors outside of the 
        States levying the taxes and fees.

SEC. 3. LIMITATION ON TAXATION AND FEES ON TRANSACTIONS BY CERTAIN 
              SECURITIES INDUSTRY PARTICIPANTS.

    (a) In General.--The Dodd-Frank Wall Street Reform and Consumer 
Protection Act is amended by adding at the end the following new title:

   ``TITLE XVII--LIMITATION ON TAXATION AND FEES ON TRANSACTIONS BY 
                CERTAIN SECURITIES INDUSTRY PARTICIPANTS

``SEC. 1701. LIMITATION.

    ``(a) In General.--No State or political subdivision thereof may 
impose a direct or indirect tax upon a securities industry participant 
where that tax is based upon--
            ``(1) the number or volume of securities transactions that 
        the securities industry participant consummates or processes, 
        in whole or in part, within that State or political subdivision 
        or by utilizing personnel, resources, systems, facilities, 
        vendors, technology, or infrastructure that are located in or 
        that traverse that State or political subdivision; or
            ``(2) the value of such securities transactions.
    ``(b) Preservation of State and Local Taxing Authority.--Except as 
provided in this section, nothing in this title shall be construed to 
modify, impair, or supersede, or authorize the modification, 
impairment, or superseding of, any State or local law pertaining to 
taxation that is otherwise permissible by or under the Constitution of 
the United States or other Federal law and in effect on the date of 
enactment of this Act.
    ``(c) Exception.--
            ``(1) In general.--Individual States may impose taxes and 
        collections of those taxes on covered persons for transactions, 
        which may have occurred within the national market system, to 
        buy or sell securities of their own accord.
            ``(2) Covered person defined.--For purposes of paragraph 
        (1) and with respect to a State, the term `covered person' 
        means--
                    ``(A) an individual with primary residence and 
                domicile in that State; and
                    ``(B) businesses, corporations, and other entities 
                that--
                            ``(i) are not part of the national market 
                        system; and
                            ``(ii) are domiciled in and subject to that 
                        State's legal requirements.
    ``(d) Definitions.--For purposes of this section:
            ``(1) Alternative trading system.--The term `alternative 
        trading system' shall have the meaning set forth in section 
        242.300 of title 17, Code of Federal Regulations.
            ``(2) Commodity.--The term `commodity' shall have the 
        meaning set forth in section 1a of the Commodity Exchange Act 
        (7 U.S.C. 1a(9)).
            ``(3) National securities exchange.--The term `national 
        securities exchange' shall have the meaning given such term 
        under section 6 of the Securities Exchange Act of 1934 (15 
        U.S.C. 78f(a)).
            ``(4) Process.--The term `process' shall include all 
        activities involved directly or indirectly in effectuating a 
        securities transaction, including entering, transmitting, 
        routing, matching, and executing orders in securities, as well 
        as clearing, settling, reporting, and consolidation and 
        dissemination of data and any other incidental activity 
        relating to securities transactions, including to the 
        maintenance and operation of backup and disaster recovery 
        facilities and systems.
            ``(5) Securities industry participant.--The term 
        `securities industry participant' means a federally regulated 
        self-regulatory organization, national securities exchange, 
        alternative trading system, securities information processor, 
        commodities exchange, clearing agency, trade reporting 
        facility, broker, dealer, or securities trading system or 
        platform owned or operated by a broker or dealer.
            ``(6) Securities transaction.--The term `securities 
        transaction' means the purchase or sale of a security.
            ``(7) Other securities definitions.--The terms `broker', 
        `clearing agency', `dealer', `exchange', `securities 
        information processor', `security', and `self-regulatory 
        organization' shall have the meanings given those terms, 
        respectively, under section 3(a) of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78c(a)).''.
    (b) Clerical Amendment.--The table of contents under section 1(b) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act is 
amended by adding at the end the following:

``TITLE XVII--LIMITATION ON TAXATION AND FEES ON TRANSACTIONS BY 
                            CERTAIN SECURITIES INDUSTRY PARTICIPANTS.
``Sec. 1701. Limitation.''.
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