Democratic presidential frontrunner outlined her proposals Monday, including an ‘exit tax’ for companies that merge with others abroad to escape US taxes

Hillary Clinton previewed a slew of ideas “to rein in Wall Street” on Monday, including fines for executives whose companies break the law and an “exit tax” on companies moving abroad.

The Democratic presidential frontrunner outlined her proposals in part to reassure progressive voters that she has the will to fight bankers who have backed her.

Clinton used briefings from campaign officials and an op-ed in the New York Times to trail a major speech she will give on Wednesday on finance reform.

The former secretary of state has proposed several new taxes, some in more detail than others. She suggests a tax on carried interest for fund managers, another on “harmful” high-frequency trading, and a “risk fee” for banks with more than $50bn in assets, to “discourage the kind of hazardous behavior that could induce another crisis”.

She also wants executives to suffer cuts to their bonuses when a company settles with the government over wrongdoing, and for that company to admit guilt in any settlement.

Campaign officials also described what they called an “exit tax”, for companies that merge with others abroad to escape US taxes, a practice known as corporate inversion. Experts say US companies currently hoard about $2tn in profits overseas, and in November the companies Pfizer and Allergan announced they planned to merge into a pharmaceutical group worth $160bn, with a newly lowered tax rate.

In Ireland, where Pfizer would move its headquarters, the company would lower its tax rate from about 25% to 18%, a move with which it would have saved almost $1bn a year US taxes in 2014. At a rally in Colorado last month, Clinton said she has “deep concerns” about the merger.

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“I want the Treasury Department to do everything it can to stop that kind of behavior and call it for what it is: gaming the tax system,” she said.

Under Clinton’s plan, companies like Pfizer would be subject to the new tax on foreign earnings. Republicans have argued that preventing inversions requires stripping the tax code to make the US more attractive for businesses.

Bernie Sanders, her main rival in the Democratic primary, has made finance reform and inequality the central issues of his campaign, which has won impassioned support from young people and progressives.

But while Sanders, a self-described democratic socialist, has railed for decades against inequities and abuses in the financial sector, Clinton has faced criticism for her close ties to the industry. In 2013, she made more than $3m for speaking at banks such as Goldman Sachs and Morgan Stanley, for instance, and over four decades she and her husband have raked in $69m from employees and political groups on Wall Street.

Clinton has moved closer to Sanders’ position in recent months, for example with a rejection of bank bailouts like those she voted for in 2008, during the depths of the worst financial crisis. Her op-ed offered a laundry list of new finance reforms that similarly favor more regulation but do not go as far as Sanders, who has called for the government to break up the biggest banks.

But while advocates of finance reform welcomed Clinton’s aspirations, some said serious questions still trouble her campaign.

“It’s not clear whether or not Clinton would continue Democrats’ practice of appointing Wall Street veterans who did the same sort of behavior that we need the Treasury Department to fight,” said Jeff Hauser, project manager at the Center for Effective Government, a non-profit that focuses on fiscal issues.



Presidents from both parties have repeatedly asked Wall Street heavyweights to manage top government positions. Bill Clinton, George W Bush and Barack Obama have respectively appointed Robert Rubin, Henry Paulson (both of Goldman Sachs) and Jack Lew (of Citigroup) to the position of secretary of the Treasury. Most recently, Obama appointed Mary Jo White, a former prosecutor and corporate defense lawyer, to head the regulatory Securities and Exchange Committee.

“She needs to clarify, essentially, the type of people that she would appoint,” Hauser said, “so we can know whether her statements about tougher enforcement are serious.”

Hauser used the Pfizer merger as a case in point of the hazy web of interests that entangle politics and business. One of Clinton’s top fundraisers, financier Blair Effron, runs a boutique investment firm that advised Pfizer on the deal.

Presidents have some power to direct regulation and law enforcement, he noted, but systemic problems require a whole cast of characters to reform the system.

“These written aspirations of getting tough on inversions, of more independent financial enforcement, they all sound great,” Hauser said. “But until she says she’s going to stop the revolving door from Wall Street, until she says people like Blair Effron are not going to be rewarded, a key element is missing.”