WASHINGTON — Sen. Tom Harkin wants to create a new tax, but he says it's just an itty-bitty one — fractions of a penny on the dollar.
Still, it would collect big money from federal taxpayers: $350 billion over 10 years.
The Iowa Democrat and other lawmakers announced Thursday that they're making a fresh run at a transaction tax on Wall Street trades. For every $100 in trades, the tax would be three cents.
“There's no question that Wall Street can easily bear this modest tax,” Harkin said at a Capitol Hill press conference. “I predict that once it's in place, few will even notice it.”
The tax would not apply to new issuances of stocks or bonds, but it would apply to traded stocks and bonds, as well as options, puts and many other complex financial instruments.
The idea has been floated before without gaining traction. Top members of the Obama administration rejected it.
Harkin said he's imbued with fresh optimism now, however, given changes in President Barack Obama's economic team and the widespread focus on addressing the country's budget deficit.
He predicted Republicans would come to embrace the idea eventually, because it could help lower other tax rates.
Sen. Mike Johanns, R-Neb., said he would not support the new transaction tax and predicted that it wouldn't go anywhere — that it lacks support even among Harkin's fellow Democrats.
He said Harkin comes at the country's fiscal problems favoring greater government spending.
“He's going to look for ways to tax, and I just fundamentally disagree with that,” Johanns said. “I look at the growth in spending and it's not sustainable. You can't tax aggressively enough.”
Harkin noted that European countries are implementing an even higher transaction tax. He said those on Wall Street will claim the tax would slow the financial sector.
“That's just nonsense. It's not going to happen,” Harkin said. “And, in fact, if it does slow down some of these high-speed, micro-second trades, it will add to the stability ... in the marketplace for long-term investors who really do want to put their money in instruments that will be there for them when they retire.”