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Congressman: Tax Wall Street to Help Main Street

(US Congress)
Rep. Pete DeFazio (D-Ore.) is seeking co-sponsors for the "Let Wall Street Pay for the Restoration of Main Street Act," which he suggests could raise $150 billion per year through a securities transaction tax.

The money raised "will be invested in the current needs of Main Street America," according to a message DeFazio sent to House colleagues seeking support for the effort.

"We cannot sit back and assume that job creation will turn around," the message says. "We must make it clear to our constituents that we know Main Street is suffering and a restored Wall Street should now share in its recovery with everyone else. Timely job creation and deficit reduction is the fair thing to do."

The tax would be applied to stock transactions (at 0.25 percent), futures, swaps, credit default swaps and options. In an effort to make sure it does not affect pension funds or average investors, it would be refunded for the first $100,000 of transactions annually, as well as for tax-favored retirement accounts, education savings accounts and health savings accounts.

DeFazio notes that the United States had a similar tax from 1914 to 1966. The United Kingdom currently has one, he writes, and maintains "the highest volume exchange in Europe." He said the British experience is evidence that such a tax would not push trading overseas.

Half of the revenue generated would go to reduce the federal deficit, he said. The other half would go to fund jobs creation programs.

The proposed legislation currently has five cosponsors.

Wall Street giant Goldman Sachs announced yesterday that it is donating $500 million for a program to help small businesses. That represents about three percent of what it has set aside to pay its employees in 2009.

"We participated in things that were clearly wrong and have reason to regret," the company's chairman said in conjunction with the announcement. "We apologize."

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