H.R.4035 - Wall Street Tax Act of 2025 (119th Congress)
Summary
H.R.4035, the Wall Street Tax Act of 2025, proposes to amend the Internal Revenue Code of 1986 by imposing a tax on certain trading transactions. The tax would apply to covered transactions involving securities and derivatives, with rates increasing incrementally from 0.02% in 2026 to 0.1% in 2030. The bill defines key terms such as 'covered transaction,' 'security,' and 'derivative,' and specifies who is responsible for paying the tax.
Expected Effects
The implementation of this act would likely increase the cost of trading, potentially reducing trading volume and market liquidity. Revenue generated from the tax could be used to fund other government programs. The tax could also impact the competitiveness of U.S. markets relative to international markets.
Potential Benefits
- Potential increase in government revenue that could be used to fund public services or reduce the national debt.
- Discouragement of excessive speculation and high-frequency trading.
- Could lead to a more long-term investment focus rather than short-term gains.
- May reduce market volatility by increasing the cost of rapid trading.
- Could promote greater fairness in the tax system by taxing financial transactions.
Most Benefited Areas:
Potential Disadvantages
- Increased cost of trading could reduce market liquidity and trading volumes.
- Potential negative impact on investment returns, particularly for retirement accounts and pension funds.
- Could make U.S. markets less competitive compared to those in countries without such a tax.
- Possibility of tax avoidance strategies, such as moving trading activities to other jurisdictions.
- Complexity in implementation and compliance, leading to administrative burdens.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's authority stems from Article I, Section 8 of the U.S. Constitution, which grants Congress the power to lay and collect taxes. The constitutionality of the tax itself is unlikely to be challenged successfully, as Congress has broad authority in this area. However, the specific implementation and definitions within the bill could be subject to legal scrutiny to ensure they do not infringe on other constitutional rights or principles.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).