The GameStop situation highlights serious investor protection issues and market integrity, a White House spokesman told CNN Business on Sunday. The potential impact of a financial transaction tax on GameStop trading deserves further study and may be part of a higher assessment of such an income tax and market stability, the spokesman said.
Some Democrats have called for a stock trading tax as a way to raise much-needed revenue and address concerns about the health of financial markets. On Thursday, the president of the House’s Financial Services, Maxine Waters, said she was “very interested” and “certainly looking” at a financial transaction tax.
A 0.1% tax on transactions in stocks, bonds and derivatives could raise $ 777 billion for the federal government over a decade, according to a 2018 estimate by the nonpartisan Congressional Budget Office.
However, such a tax would face fierce opposition from Wall Street, and it is unclear whether moderate Democrats would support it. Opponents warn that it will set fire to retail investors by increasing costs and reducing the liquidity of financial markets.
“This approach has a long history of unintended consequences that will penalize American workers, retirees and families,” a spokesman for the Coalition for the Prevention of Taxation of Retirement Savings told CNN Business.
This coalition includes the New York Stock Exchange, the Nasdaq and UBS. Citadel Securities and Virtu Financial are also members, two high-speed trading companies that would be affected by a financial transaction tax.
“A FTT will increase trading costs for investors – including individuals – undermining the competitiveness of our capital markets and harming the US economy as we work to recover from this pandemic,” the spokesman said.
“Let’s not ignite the American people. You’ll be fine with the tax,” she said. “Our people are tired of saving you all when you are wrong.”