◼ FINANCE Bloomberg Businessweek March 1, 202122
Democrats in Washington are seizing on the recent
frenetic trading in GameStop Corp. to push a
financial transaction tax. It’s an idea long favored by
progressives, but it sets up a battle with Wall Street.
Such a tax would exact a tiny sum from every secu-
rities trade. Supporters including Senators Elizabeth
Warren of Massachusetts and Bernie Sanders of
Vermont see it as a way to curb the kind of specula-
tive blitz that led to January’s chaotic swings in the
market and to raise money for such Democratic pri-
orities as increased public works spending. After a
House hearing on Feb. 18 to examine the GameStopsufficient. The vehicle was no longer able to meet
its commitments, and its investors had to agree to a
delayed repayment schedule.
The investment in Oilflow SPV 1 DAC by PSERS
was part of a wide portfolio of emerging-market
debt holdings that was managed for it by Franklin
Templeton, according to a spokesman. “PSERS’
investment professionals and consultants are well
aware of the risks involved with this type of emerg-
ing market investment, as well as the pros and cons
involved in all its investment strategies and port-
folios,” the spokesman wrote in an email. By June
2020, the last time PSERS filed a disclosure on its
holdings, the value of its investment in Oilflow
SPV 1 DAC had fallen by more than a fifth.
Commodity traders like to say they’re apolitical—
they’ll make any trade that’s legal and profitable. But
even if political influence isn’t their goal, that doesn’t
mean that they’re not influential. In a world where
commodities are a direct route to money and power,
the traders have the ability to change the course of
history. A few weeks after the independence refer-
endum, Ian Taylor, then head of Vitol, was asked
whether the traders had been instrumental in
pushing Kurdistan over the line. After a pause, he
acknowledged: “We were, yeah.” They may not have
realized it, but so were the teachers of Pennsylvania.
�Javier Blas and Jack FarchyExcerpted from The World for Sale, published by
Random House Business in the U.K. on Feb. 25 and
Oxford University Press in the U.S. on March 1.trading, Representative Maxine Waters, the California
Democrat who chairs the committee, said she’s
considering such a tax.
Investment firms and stock exchanges are lining
up lobbyists and public-relations firms to try to stop
it. “Financial transaction taxes at the federal or
state level unfairly target America’s mom and pop
investors and working families saving for retirement,”
says Chris Iacovella, chief executive officer of the
American Securities Association, a trade group for
financial-services firms. Robinhood Markets Inc.,
whose popular, commission-free trading app helped
ignite the stock frenzy, registered its first in-house
lobbyists in February and said the proposed tax is
one of the issues they will tackle.
One proposal gaining traction, by Representative
Peter DeFazio, an Oregon Democrat, calls for a levy
on trading firms of 10¢ for every $100 of securities
traded, though other proposals have suggested as
low as 5¢ and as high as 50¢.
A tax hasn’t garnered support from some top
Democrats, including Senate Majority Leader Chuck
Schumer of New York, who’s been wary to back an
idea targeting one of his state’s key industries. Bills
that include such a tax would likely need united
support from Democratic lawmakers, making the
effort an uphill climb. But a smaller one, such as a
tax targeted to certain securities or with an extended
phase-in period, is a “very real possibility,” says Isaac
Boltansky, a Compass Point Research & Trading
analyst. As a candidate in 2019, President Joe Biden
expressed support for a transaction tax, but he never
released a detailed proposal. A White House spokes-
person says the impact of such a tax warrants study.
In January, South Carolina Representative James
Clyburn, the No. 3 Democrat in the House, threw his
support behind the idea. Clyburn noted the DeFazio
proposal was projected to raise $777 billion over
10 years, money that could be used on job creation
initiatives and health care. Proponents say it could
also encourage long-term oriented investment. “The
speculation that we’ve seen in the market, not just
around GameStop but in all of the casino that is Wall
Street, has raised the attention,” says Susan Harley,
a lobbyist and managing director of the Congress
Watch division of Public Citizen, a progressive advo-
cacy organization. “Those dollars are very attractive.”
During the congressional hearing, Michigan
Democrat Rashida Tlaib sparred with Citadel founder
Ken Griffin over the tax, which she framed as a way to
address inequality. She called it “one way to ensure
that this enormous wealth generated on Wall Street
actually reaches the real economy.” Griffin argued
that it “will injure Americans hoping to save for retire-
ment.” A financial transaction tax would eat into the▼ Projected change in
U.S. tax revenue from
a proposed tax on
financial transactions*◀ Overall revenue
falls initially from a
drop in capital-gains
receipts$ 100b5 00-50● A flurry of speculation and scrutiny of hedge
funds revives the idea of a levy on tradesA Tax?
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