Pelosi: Passing a Wall Street Transport Tax Would Require Overseas Buy-in

Any proposal to fund new U.S. infrastructure investment by taxing
financial transactions -- such as Rep. Pete DeFazio's (D-OR) bill taxing
Wall Street oil speculators -- would require international
participation to prevent the trades in question from migrating
overseas, House Speaker Nancy Pelosi (D-CA) said today.

House Speaker Nancy Pelosi (Photo: MoniqueMonicat)

As House Democrats weigh their options for a new job-creation plan, slated for a vote before year's end, infrastructure spending is attracting
new support from party leaders. But the question of how much to spend,
and whether a new six-year transportation measure could be presented as
a jobs bill, is tied up in ongoing uncertainty over where the necessary
funding would come from.

DeFazio's recommendation to impose a
small per-trade tax on the Wall Street oil futures market has picked up
endorsements from progressive economists and writers
as well as 29 of his fellow Democrats. Pelosi, however, was cautious in
addressing its prospects today during her weekly press briefing.

"One
of the concerns that some of us have about it," the Speaker said, "is
what it [might do] to us in terms of transactions going offshore."

Emphasizing
that the idea "is just something that is on the table," Pelosi added
that passing a tax proposal such as DeFazio's would require
consultation with and buy-in from other nations: "It would have to be
an international rule, not just a U.S. rule."

Barney Frank
(D-MA), chairman of the House Financial Services Committee, is among
those who have expressed concerns that a Wall Street transaction tax,
unless properly structured, would drive financial activity onto foreign
commodity exchanges, thus generating lower-than-expected revenues.

Imposing a transaction tax "country by country ... would be a problem," Frank told the Wall Street Journal last month.

Pelosi's
response today does not signal a decline in House-side momentum for
DeFazio's proposal; she noted that financial regulators in the United
Kingdom and elsewhere have spoken favorably of transaction taxes (also known as "Tobin" taxes).

But
even if House Democrats ultimately embrace the idea as a revenue-raiser
for their jobs bill, the proposed tax is guaranteed to face an uphill
battle in the Senate -- where Wall Street has no shortage of powerful allies.