The push for a Wall Street transaction tax continues to gain traction in Washington. In a fresh show of support, a majority of the Democratic members of the House of Representatives voted today for the Congressional Progressive Caucus’s “People’s Budget,” which includes a transaction tax. The 96 votes cast in favor of the CPC budget are 8 more votes than a similar proposal received last year.

A Wall Street transaction tax makes compelling sense on three levels:

• First, as a way of getting the financial industry to bear a fairer share of the tax burden. (While U.S. banks and financial companies reap more than a quarter of the nation’s corporate profits, they pay only about 18 percent of corporate taxes and contribute less than 2 percent of total tax revenues, according to the Bureau of Economic Analysisand the International Monetary Fund.)
• Second, to move the financial system in a safer direction, and one more focused on serving real economic needs. It does so by reducing churning and speculation, including high-frequency trading that generates dangerous volatility and creates continual opportunities for insiders to profit at the expense of average investors and market integrity.
• Third, to raise significant revenue in order to fund important public priorities.

Americans for Financial Reform also supports the idea of a tax on the liabilities of financial institutions, which is another element of the CBC proposal. Since this tax would fall specifically on debt liabilities, it would create incentives against excessive leverage in the financial sector, while raising revenue as well.