Inclusive Prosperity Act - Amends the Internal Revenue Code to: (1) impose a tax on the transfer of ownership in certain securities, including any share of stock in a corporation, any partnership or beneficial interest in a partnership or trust, any note, bond, debenture, or other evidence of indebtedness (excluding tax-exempt municipal bonds), or derivative financial instruments; and (2) allow an individual taxpayer whose modified adjusted gross income does not exceed $50,000 a tax credit for the amount of tax paid on financial transactions under this Act.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6411 Introduced in House (IH)]
112th CONGRESS
2d Session
H. R. 6411
To impose a tax on certain trading transactions to strengthen our
financial security, expand opportunity, and stop shrinking the middle
class.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 14, 2012
Mr. Ellison (for himself, Mr. Conyers, Mr. Stark, Mr. Filner, Ms.
Woolsey, Mr. McGovern, and Ms. Lee of California) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To impose a tax on certain trading transactions to strengthen our
financial security, expand opportunity, and stop shrinking the middle
class.
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 ``Inclusive Prosperity Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) The global financial crisis cost Americans $19 trillion
in lost wealth.
(2) The global financial crisis was caused by financial
firms taking great financial risks without disclosing those
risks to their investors or their regulators, and by regulatory
failures to adequately police the financial services markets
for crime, unfair or deceptive practices, fraud, lack of
transparency, and mismanagement.
(3) Deceptive, illegal, and speculative financial practices
have harmed public confidence in the integrity and fairness of
many United States financial institutions, and threaten the
basic strengths of the United States economic system.
(4) American citizens provided the money to stabilize the
financial sector, making $600 billion available to 800
financial institutions, automakers, and insurance companies.
(5) The global financial crisis, along with the wars,
unsustainable tax cuts, and a continuing unemployment crisis
and looming loss of unemployment benefits, if unaddressed, will
deprive a generation of a meaningful role in the larger
economy.
(6) Nurses, teachers, public safety officers, and other
public sector workers have faced drastic funding cuts, harming
our long-term public safety and prospects for economic growth.
(7) According to economists, a small tax on transfer of
ownership of every financial trade could generate hundreds of
billions annually in revenue, which when invested could help
create sufficient jobs in both the public and private sectors
to replace the 8 million jobs lost in the recent recession and
add even more jobs on an ongoing basis.
(8) A transfer tax will help limit reckless short-term
speculation that threatens financial stability.
(9) A securities transfer tax would have a negligible
impact on the average investor.
(10) The United States had a transfer tax from 1914 to
1966: The Revenue Act of 1914 (Act of Oct. 22, 1914 (ch. 331,
38 Stat. 745)) levied a 0.2 percent tax on all sales or
transfers of stock which was doubled in 1932 to help overcome
the budgetary challenges during the Great Depression.
(11) Forty nations have a financial transactions tax and
more than 1,000 economists have endorsed it.
(12) Revenue generated by this tax will be available to--
(A) strengthen financial security and expand
opportunity for low- and moderate-income families,
including strengthening the social safety net and
expanding resources for child care, Social Security,
and savings incentives;
(B) expand resources for State and Federal
investments that protect our health, rebuild our
crumbling physical infrastructure, and create good
paying jobs by--
(i) expanding and improving Medicare and
Medicaid;
(ii) investing in education, student debt
relief, job training, public sector jobs, and
green jobs;
(iii) providing housing assistance to low-
income households;
(iv) investing in transportation including
transit and an infrastructure bank that
promotes environmentally responsible domestic
manufacturing and construction industries; and
(v) protecting our environment and building
a clean energy economy, including efforts to
combat climate change; and
(C) fund international sustainable prosperity
programs such as health care investments, AIDS
treatment, research and prevention programs, and
international assistance.
SEC. 3. 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:
``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 the
transfer of ownership in 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 the applicable percentage
of the specified base amount with respect to such covered transaction.
The applicable percentage shall be--
``(1) 0.5 percent in the case of a security described in
subparagraph (A) or (B) of subsection (e)(1),
``(2) 0.10 percent in the case of a security described in
subparagraph (C) of subsection (e)(1), and
``(3) 0.005 percent in the case of a security described in
subparagraph (D), (E), or (F) of subsection (e)(1).
``(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, other than a State or local bond the
interest of which is excluded from gross income under
section 103(a),
``(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 including notional
principal contracts, and
``(F) any other derivative financial instrument any
payment with respect to which is calculated by
reference to any specified index.
``(2) Derivative financial instrument.--The term
`derivative financial instrument' includes any option, forward
contract, futures contract, notional principal contract, or any
similar financial instrument.
``(3) 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, which is
based on any current objectively determinable
information which is not within the control of any of
the parties to the contract or instrument and is not
unique to any of the parties' circumstances.
``(4) 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 60
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)), the 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) Administration.--The Secretary shall carry out this section
in consultation with the Securities and Exchange Commission and the
Commodity Futures Trading Commission.
``(j) Guidance; Regulations.--The Secretary shall--
``(1) provide guidance regarding such information reporting
concerning covered transactions as the Secretary deems
appropriate, including reporting by the payor of the tax in
cases where the payor is not the purchaser, 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) 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''.
(c) Effective Date.--The amendments made by this section shall
apply to transactions after December 31, 2012.
SEC. 4. OFFSETTING CREDIT FOR FINANCIAL TRANSACTION TAX.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25D the
following new section:
``SEC. 25E. FINANCIAL TRANSACTION TAX PAYMENTS.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the tax paid during the taxable
year under section 4475.
``(b) Limitation Based on Modified Adjusted Gross Income.--
``(1) In general.--Subsection (a) shall not apply to a
taxpayer for the taxable year if the modified adjusted gross
income of the taxpayer for the taxable year exceeds $50,000
($75,000 in the case of a joint return and one-half of such
amount in the case of a married individual filing a separate
return).
``(2) Modified adjusted gross income.--For purposes of
paragraph (1), the term `modified adjusted gross income' means
adjusted gross income--
``(A) determined without regard to sections 86,
893, 911, 931, and 933, and
``(B) increased by the amount of interest received
or accrued by the taxpayer during the taxable year
which is exempt from tax.
``(3) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning after 2013, each dollar amount referred to in
paragraph (1) shall be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section (1)(f)(3) of the
Internal Revenue Code of 1986 for the calendar
year in which the taxable year begins, by
substituting `2012' for `1992'.
``(B) Rounding.--If any amount as adjusted under
clause (i) is not a multiple of $50, such amount shall
be rounded to the nearest multiple of $50.
``(c) Eligible Individual.--
``(1) In general.--The term `eligible individual' means,
with respect to any taxable year, an individual who--
``(A) has attained the age of 18 as of the last day
of such taxable year, and
``(B) is a citizen or lawful permanent resident
(within the meaning of section 7701(b)(6)) as of the
last day of such taxable year.
``(2) Certain individuals not eligible.--For purposes of
paragraph (1), an individual described in any of the following
provisions of this title for the preceding taxable year shall
not be treated as an eligible individual for the taxable year:
``(A) An individual who is a student (as defined in
section 152(f)(2)) for the taxable year or the
immediately preceding taxable year.
``(B) An individual who is a taxpayer described in
subsection (c), (d), or (e) of section 6402 for the
immediately preceding taxable year.
``(C) A married individual who files a separate
return for the taxable year.''.
(b) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 25D the following new
item:
``Sec. 25E. Financial transaction tax payments.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2012.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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