GameStop: Ilhan Omar suggests new stock trades tax to be used to pay off student debt

Congresswoman says it could raise around $1 trillion 

Graeme Massie
Los Angeles
Monday 01 February 2021 22:02
Robinhood boss defends GameStop trading restrictions

Ilhan Omar has suggested a new tax on stock trades that could be used to pay off student debt.

The congresswoman called for the new tax in the wake of the Reddit-inspired GameStop trading frenzy that has caused wild swings in the company’s stock price.

Ms Omar took to twitter to promote the idea of a 0.1 per cent tax, which she says would impact Wall Street’s high-frequency traders, and claimed it could raise around $1 trillion.

“A small tax – 0.1% – on each Wall Street trade would reduce high-frequency trading, a practice that drains profits from retail investors and benefits only the very rich,” Ms Omar tweeted.

Her calls for the tax came after retail investors, who organised on Reddit, bought the heavily-shorted GameStop stock, driving up its price dramatically from around $19 to a high of $483.

The pumping of the stock cost Wall Street investors and hedge funds who had taken short positions in a bet against the company billions of dollars.

Ms Omar has previously introduced legislation with Bernie Sanders to eliminate the country’s $1.6 trillion in student debts.

This included a “Wall Street speculation tax” on financial investments transactions, including a tax of 0.5% on stock trades, a 0.1% fee on bonds and a 0.0005% levy on derivatives.

This plan would raise $2.4 trillion over a decade, according to the lawmakers.

Both the House and Senate have announced hearings into the GameStop affair and the way in which investment app Robinhood restricted trading by its customers.

Former presidential hopeful, Senator Elisabeth Warren, has called for the Securities and Exchange Commission to more tightly regulate the market.

The SEC announced that it would work to protect “retail investors” by reviewing the trading volatility and the actions of brokerages who may “unduly inhibit their ability to trade certain securities".

Robinhood was sued by customers amid claims they had sided with Wall Street institutions over amateur investors by temporarily suspending new purchases of GameStop and other Reddit-targeted stocks.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments