GameStop’s situation highlights serious issues of investor protection and market integrity, a White House spokesman told CNN Business on Sunday. The potential impact of a financial transaction tax on GameStop-type negotiations deserves further study and could be part of a larger assessment of that tax on revenue and market stability, the spokesman said.
Some Democrats supported a stock trading tax as a way to increase much-needed revenue and address concerns about the health of financial markets. On Thursday, House financial services president Maxine Waters said she was “very interested” and “certainly looking” at a tax on financial transactions.
A 0.1% tax on stocks, bonds and derivative transactions could raise $ 777 billion for the federal government over a decade, according to a 2018 estimate by the non-partisan 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 the shot would backfire on retail investors by raising costs and making financial markets less liquid.
“This approach has a long history of unintended consequences that will penalize American workers, retirees and families,” a spokesman for the Coalition to Prevent Taxation of Retirement Savings told CNN Business.
This coalition includes the New York Stock Exchange, Nasdaq and UBS. Citadel Securities and Virtu Financial, two high-speed trading firms that would be hampered by a financial transaction tax, are also members.
“An FTT will increase trading costs for investors – including individuals – will undermine the competitiveness of our capital markets and hurt the United States’ economy as we work to recover from this pandemic,” said the spokesman.
“We are not going to deceive the American people. You will be fine with the tax,” she said. “Our parents are tired of paying bail when you screw up.”