Wall Street Trading and Speculators Tax Act

Bill: 113-s-410
Sponsor: full_name: Sen. Harkin, Tom [D-IA]
Introduced: 2013-02-28
Policy area: Taxation
Subjects: Commodities markets

Employee benefits and pensions

Foreign and international corporations

Health care costs and insurance

Income tax credits

Income tax deferral

Sales and excise taxes

Securities

Student aid and college costs

Tax administration and collection, taxpayers
Latest action: action_date: 2013-02-28
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2013-02-28
action_desc: Introduced in Senate
text: <p>Wall Street Trading and Speculators Tax Act - Amends the Internal Revenue Code to impose a .03% excise tax on the purchase of a security if: (1) such purchase occurs or is cleared on a trading facility located in the United States, or (2) the purchaser or seller is a U.S. person. </p> <p>Defines "security" to include: (1) stocks, partnership interests, notes, bonds, debentures, or other evidences of indebtedness; (2) interests in a derivative financial instrument (i.e., any option, forward contract, futures contract, or any similar financial instrument) and (3) any notional principal contract. </p> <p>Exempts from such tax: (1) initial issues of securities; (2) any note, bond, debenture, or other evidence of indebtedness which is traded on a trading facility located in the United States and has a fixed maturity of not more than 100 days; and (3) securities traded pursuant to certain lending arrangements. Makes such tax applicable to transactions by controlled foreign corporations and payable by its U.S. shareholders. </p> <p>Allows an offset against such tax for contributions to certain tax-favored accounts, including tax-exempt retirement plans, Archer medical savings accounts, health savings accounts, and qualified tuition plans and Coverdell education savings accounts.</p>

tv_txt: II 113th CONGRESS 1st Session S. 410 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. Short title This Act may be cited as the Wall Street Trading and Speculators Tax Act . 2. Transaction tax (a) In general Chapter 36 of the Internal Revenue Code of 1986 is amended by inserting after subchapter B the following new subchapter: C Tax on Trading Transactions Sec. 4475. Tax on trading transactions. 4475. Tax on trading transactions (a) Imposition of tax There is hereby imposed a tax on each covered transaction with respect to any security. (b) Rate of tax The tax imposed under subsection (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 the security (determined as of the time of the covered transaction), and (2) in the case of any payment described in subsection (h), the amount of such payment. (d) Covered transaction For purposes of this section, the term covered transaction means— (1) except as provided in paragraph (2), any purchase if— (A) such purchase occurs or is cleared on a facility located in the United States, or (B) the purchaser or seller is a United States person, and (2) any transaction with respect to a security described in subparagraph (D), (E), or (F) of subsection (e)(1), if— (A) such security is traded or cleared on a facility located in the United States, or (B) any party with rights under such security is a United States person. (e) Security and other definitions For purposes of this section— (1) In general The term security means— (A) any share of stock in a corporation, (B) any partnership or beneficial ownership interest in a partnership or trust, (C) any note, bond, debenture, or other evidence of indebtedness, (D) any evidence of an interest in, or a derivative financial instrument with respect to, any security or securities described in subparagraph (A), (B), or (C), (E) any derivative financial instrument with respect to any currency or commodity, and (F) any notional principal contract. (2) Derivative financial instrument The term derivative financial instrument includes any option, forward contract, futures contract, or any similar financial instrument. (3) Notional principal contract Except as otherwise provided by the Secretary, the term notional principal contract means any financial instrument which requires two or more payments at specified intervals calculated by reference to a specified index upon one or more notional principal amounts. An amount shall not fail to be treated as a payment described in the preceding sentence merely because such amount is fixed on one date and paid or otherwise taken into account on a different date. (4) Specified index The term specified index means any 1 or more of any combination of— (A) a fixed rate, price, or amount, or (B) a variable rate, price, or amount, (C) any index based on any objectively determinable information (including the occurrence or nonoccurrence of any event) which is not within the control of any of the parties to the instrument and is not unique to any of the parties’ circumstances, and (D) any other index as the Secretary may prescribe. (5) Treatment of exchanges (A) In general An exchange shall be treated as the sale of the property transferred and a purchase of the property received by each party to the exchange. (B) Certain deemed exchanges In the case of a distribution treated as an exchange for stock under section 302 or 331, the corporation making such distribution shall be treated as having purchased such stock for purposes of this section. (f) Exceptions (1) 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 subparagraph (A), (B), or (C) of subsection (e)(1). (2) Exception for certain traded short-term indebtedness A note, bond, debenture, or other evidence of indebtedness which— (A) is traded on a trading facility located in the United States, and (B) has a fixed maturity of not more than 100 days, shall not be treated as described in subsection (e)(1)(C). (3) Exception for securities lending arrangements No tax shall be imposed under subsection (a) on any covered transaction with respect to which gain or loss is not recognized by reason of section 1058. (g) By whom paid (1) In general The tax imposed by this section shall be paid by— (A) in the case of a transaction which occurs or is cleared on a facility located in the United States, such facility, and (B) in the case of a purchase not described 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)— (i) the purchaser if the purchaser is a United States person, and (ii) the seller if the purchaser is not a United States person, and (B) in the case of a transaction described in subsection (d)(2)— (i) the payor if the payor is a United States person, and (ii) the payee if the payor is not a United States person. (h) Certain payments treated as separate transactions Except as otherwise provided by the Secretary, any payment with respect to a security described in subparagraph (D), (E), or (F) of subsection (e)(1) shall be treated as a separate transaction for purposes of this section, including— (1) any net initial payment, net final or terminating payment, or net periodical payment with respect to a notional principal contract (or similar financial instrument), (2) any payment with respect to any forward contract (or similar financial instrument), and (3) any premium paid with respect to any option (or similar financial instrument). (i) Application to transactions by controlled foreign corporations (1) In general For purposes of this section, 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 (g)(1)— (A) Payment by United States shareholders Any tax which would (but for this paragraph) be payable under subsection (g)(2) by the controlled foreign corporation shall, in lieu thereof, be paid by the United States shareholders of such controlled foreign corporation as provided in subparagraph (B). (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 meaning of section 958(a)) in such controlled foreign corporation, bears to (ii) the stock so owned by all United States shareholders in such controlled foreign corporation. (C) Definitions For purposes of this subsection, the terms United States shareholder and controlled foreign corporation have the meanings given such terms in sections 951(b) and 957(a), respectively. (j) Administration The Secretary shall carry out this section in consultation with the Securities and Exchange Commission and the Commodity Futures Trading Commission. (k) Guidance; regulations The Secretary shall— (1) provide guidance regarding such information reporting concerning covered transactions as the Secretary deems appropriate, and (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-Favored accounts To offset transaction tax (1) In general Subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after section 36B the following new section: 36C. Offset for transaction tax with respect to certain tax-favored accounts (a) In general There shall be allowed as a credit 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 taxable year. (b) Qualified tax-Favored account contributions 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 allowable as a deduction or are excludable from gross income (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 taxpayer, the amount allowed as a deduction under section 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) and Coverdell education savings accounts (as defined in section 530) with respect to which the taxpayer is the designated 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. . (2) Conforming amendments (A) Section 1324(b)(2) of title 31, United States Code, is amended by inserting , 36C after 36B . (B) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue 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 accounts. . (c) Information reporting with respect to controlled foreign corporations Subparagraph (B) of section 6038(a)(1) is amended by inserting and transactions which are covered transactions for purposes of section 4475 by reason of the application of section 4475(i)(1) to such corporation before the semicolon at the end. (d) Clerical amendment The table of subchapters for chapter 36 of the Internal Revenue Code of 1986 is amended by inserting after the item relating 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, 2013.