# What the Wall Street Tax Act of 2023 Actually Does

This bill creates a new tax on financial trading. Whenever someone buys or sells stocks, bonds, or certain complex financial contracts on U.S. exchanges, they'll have to pay a small tax to the government. The tax rate is 0.1 percent—meaning for every $1,000 worth of securities you trade, you'd owe $1 in tax. It sounds tiny, but it adds up quickly for active traders.

The tax applies to most stock purchases and sales, as well as bonds and derivatives (which are complex financial bets on whether prices will go up or down). There are a few exceptions: when a company first issues new stock or bonds, no tax applies. Also, very short-term debt that matures in 100 days or less is exempt. The bill specifically targets trading activity rather than long-term investing, since it only taxes the transaction itself, not the profits you make.

Who actually pays this tax depends on the situation. For trades on major U.S. stock exchanges, the exchange itself would collect and pay the tax. For other trades, it typically falls on brokers or the traders themselves—usually whoever is a U.S. person involved in the deal. The bill also has special rules for foreign companies owned by Americans; those U.S. owners would share responsibility for paying the tax proportional to their ownership stake.

The bill takes effect on January 1, 2024, and would generate revenue for the federal government by discouraging high-frequency trading and speculation while leaving long-term investors relatively unaffected. Supporters argue it could reduce risky financial speculation, while critics worry it might increase costs for regular people with retirement accounts and make markets less liquid.

Wall Street Tax Act of 2023

Hoyle, Val T.

Wall Street Tax Act of 2023 This bill imposes a 0.1% excise tax on certain financial transactions such as the purchase of stocks, bonds, and derivatives. The tax applies to the purchase of a security if (1) such purchase occurs on, or is subject to the rules of, a qualified board or exchange located in the United States; or (2) the purchaser or seller is a U.S. person. A security includes <ul> <li> a share of stock in a corporation;</li> <li>a partnership or beneficial ownership interest in a partnership or trust; </li> <li> a note, bond, debenture, or other evidence of indebtedness; and</li> <li>derivatives that meet specified criteria. </li> </ul> The tax applies to transactions with respect to a derivative if (1) the derivative is traded on, or is subject to the rules of, a qualified board or exchange located in the United States; or (2) any party with rights under the derivative is a U.S. person. The bill exempts from such tax (1) initial issues of securities; and (2) any note, bond, debenture, or other evidence of indebtedness that is traded on or is subject to the rules of, a qualified board or exchange located in the United States, and has a fixed maturity of not more than 100 days. The tax applies to transactions by a controlled foreign corporation and must be paid by its U.S. shareholders.