Anger at Wall Street is spilling over into Congress, where Democrats are eyeing a $350 billion financial transaction tax to bring down the deficit.

The measure, introduced by Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR), would impose a 3-basis point tax on most non-consumer trades, which the Joint Committee on Taxation says would yield $350 billion over the next decade.

“It is hard to argue with this substantial revenue – derived from a tax of $3.00 on $10,000 of Wall Street trading,” Harkin said in a statement. “Our country needs every dollar possible to invest in infrastructure, job creation, the education of our children and reducing the debt among other priorities. This commonsense tax provides a viable solution.”



“This legislation will generate $350 billion in needed revenue for our cash strapped federal government by targeting speculators flipping stocks a thousand times a minute,” DeFazio added. “We need serious proposals to get our country back on sound fiscal footing. $350 billion in new revenue will reduce our deficit and enable federal investments in our future."

The measure has a handful of supporters in both chambers, but it is as yet unclear how much — if any — support it has among the leadership.

More on the tax from the statement:

The Wall Street Trading and Speculators Tax places a small tax of three basis points (3 pennies on $100 in value) on most non-consumer financial trading including stocks, bonds and other debts, except for their initial issuance. For example, if a company receives a loan from a financial company, that transaction would not be taxed. But, if the financial institution traded the debt, the trade would be subject to the tax. The tax would also cover all derivative contracts, options, forward contracts, swaps and other complex instruments at their actual cost. The measure excludes debt that has an original term of less than 100 days.

By setting the tax rate very low, the measure is not likely to impact the decision to engage in productive economic activity. It would, however, reduce certain speculative activities like high-speed computer arbitrage trading. Given the very high volume of financial trading, it will raise considerable funds, badly needed for government services and for reducing deficits.

The European Union is considering a similar proposal, but with a tax rate that is more than three times higher. Today, 30 foreign nations have in place a tax some financial transactions, including Great Britain and Switzerland.

