,,ii #aafth ,,congress #ast ,session ,s4 #fdg ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #e1 #bjai,mr4 ,schatz 7for himself1 ,mr4 ,van ,hollen1 ,mr4 ,merkley1 and ,mrs4 ,gillibrand7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to impose a tax on certain trading transactions4 #a4 ,short title ,this ,act may be cited as the ,wall ,street ,tax ,act of #bjai4 #b4 ,transaction tax 7a7 ,in general ,chapter #cf of the ,internal ,revenue ,code of #aihf is amended by inserting after subchapter ,b the following new subchapter3 ,c ,tax on ,trading ,transactions ,sec4 #ddge4 ,tax on trading transactions4,sec4 #ddgf4 ,derivative defined4 #ddge4 ,tax on trading transactions 7a7 ,imposition of tax ,there is hereby imposed a tax on each covered transaction with respect to any security4 7b7 ,rate of tax ,the tax imposed under subsection 7a7 with respect to any covered transaction shall be #j4a percent of the specified base amount with respect to such covered transaction4 7c7 ,specified base amount ,for purposes of this section1 the term specified base amount means-- 7#a7 except as provided in paragraph 7#b71 the fair market value of a security 7determined as of the time of the covered transaction71 and 7#b7 in the case of any payment with respect to a derivative1 the amount of such payment4 7d7 ,covered transaction ,for purposes of this section-- 7#a7 ,in general ,the term covered transaction means-- 7,a7 except as provided in subparagraph 7,b71 any purchase if-- 7i7 such purchase occurs on1 or is subject to the rules of1 a qualified board or exchange located in the ,united ,states1 or 7ii7 the purchaser or seller is a ,united ,states person1 and 7,b7 any transaction with respect to a derivative if-- 7i7 such derivative is traded on1 or is subject to the rules of1 a qualified board or exchange located in the ,united ,states1 or 7ii7 any party with rights under such derivative is a ,united ,states person4 7#b7 ,exception for initial issues ,no tax shall be imposed under subsection 7a7 on any covered transaction with respect to the initial issuance of any security described in subparagraph 7,a71 7,b71 or 7,c7 of subsection 7e77#a74 7e7 ,definitions and special rules ,for purposes of this section-- 7#a7 ,security ,for purposes of this section1 the term security means-- 7,a7 any share of stock in a corporation1 7,b7 any partnership or beneficial ownership interest in a partnership or trust1 7,c7 except as provided in paragraph 7#b71 any note1 bond1 debenture1 or other evidence of indebtedness1 and 7,d7 any derivative 7as defined in section #ddgf74 7#b7 ,exception for certain traded short-term indebtedness ,a note1 bond1 debenture1 or other evidence of indebtedness which-- 7,a7 is traded on1 or is subject to the rules of1 a qualified board or exchange located in the ,united ,states1 and 7,b7 has a fixed maturity of not more than #ajj days1 shall not be treated as described in paragraph 7#a77;,c74 7#c7 ,qualified board or exchange ,the term qualified board or exchange has the meaning given such term by section #abef7;g77#g74 7f7 ,by whom paid 7#a7 ,in general ,the tax imposed by this section shall be paid by-- 7,a7 in the case of a transaction which occurs on1 or is subject to the rules of1 a qualified board or exchange located in the ,united ,states1 such qualified board or exchange1 and 7,b7 in the case of a purchase not described in subparagraph 7,a7 which is executed by a broker 7as defined in section #fjde7;c77#a77 which is a ,united ,states person1 such broker4 7#b7 ,special rules for direct1 etc41 transactions ,in the case of any transaction to which paragraph 7#a7 does not apply1 the tax imposed by this section shall be paid by-- 7,a7 in the case of a transaction described in subsection 7d77#a77;,a7-- 7i7 the purchaser if the purchaser is a ,united ,states person1 and 7ii7 the seller if the purchaser is not a ,united ,states person1 and 7,b7 in the case of a transaction described in subsection 7d77#a77;,b7-- 7i7 the payor if the payor is a ,united ,states person1 and 7ii7 the payee if the payor is not a ,united ,states person4 7g7 ,treatment of exchanges and payments with respect to derivatives ,for purposes of this section-- 7#a7 ,treatment of exchanges 7,a7 ,in general ,an exchange shall be treated as the sale of the property transferred and a purchase of the property received by each party to the exchange4 7,b7 ,certain deemed exchanges ,in the case of a distribution treated as an exchange for stock under section #cjb or #cca1 the corporation making such distribution shall be treated as having purchased such stock for purposes of this section4 7#b7 ,payments with respect to derivatives treated as separate transactions ,except as otherwise provided by the ,secretary1 any payment with respect to any derivative shall be treated as a separate transaction for purposes of this section4 7h7 ,application to transactions by controlled foreign corporations 7#a7 ,in general ,for purposes of this section1 a controlled foreign corporation shall be treated as a ,united ,states person4 7#b7 ,special rules for payment of tax on direct1 etc41 transactions ,in the case of any transaction which is a covered transaction solely by reason of paragraph 7#a7 and which is not described in subsection 7f77#a7-- 7,a7 ,payment by ,united ,states shareholders ,any tax which would 7but for this paragraph7 be payable under subsection 7f77#b7 by the controlled foreign corporation shall1 in lieu thereof1 be paid by the ,united ,states shareholders of such controlled foreign corporation as provided in subparagraph 7,b74 7,b7 ,pro rata shares ,each such ,united ,states shareholder shall pay the same proportion of such tax as-- 7i7 the stock which such ,united ,states shareholder owns 7within the meaning of section #ieh7;a77 in such controlled foreign corporation1 bears to 7ii7 the stock so owned by all ,united ,states shareholders in such controlled foreign corporation4 7,c7 ,definitions ,for purposes of this subsection1 the terms ,united ,states shareholder and controlled foreign corporation have the meanings given such terms in sections #iea7;b7 and #ieg7;a71 respectively4 7i7 ,administration ,the ,secretary shall carry out this section in consultation with the ,securities and ,exchange ,commission and the ,commodity ,futures ,trading ,commission4 7j7 ,guidance2 regulations ,the ,secretary shall-- 7#a7 provide guidance regarding such information reporting concerning covered transactions as the ,secretary deems appropriate1 and 7#b7 prescribe such regulations as are necessary or appropriate to prevent avoidance of the purposes of this section1 including the use of non-,united ,states persons in such transactions4 #ddgf4 ,derivative defined 7a7 ,in general ,for purposes of this subchapter1 except as otherwise provided in this section1 the term derivative means any contract 7including any option1 forward contract1 futures contract1 short position1 swap1 or similar contract7 the value of which1 or any payment or other transfer with respect to which1 is 7directly or indirectly7 determined by reference to one or more of the following3 7#a7 ,any share of stock in a corporation4 7#b7 ,any partnership or beneficial ownership interest in a partnership or trust4 7#c7 ,any evidence of indebtedness4 7#d7 ,except as provided in subsection 7b77#a71 any real property4 7#e7 ,any commodity which is actively traded 7within the meaning of section #ajib7;d77#a774 7#f7 ,any currency4 7#g7 ,any rate1 price1 amount1 index1 formula1 or algorithm4 7#h7 ,any other item as the ,secretary may prescribe4 ,except as provided in regulations prescribed by the ,secretary to prevent the avoidance of the purposes of this subchapter1 such term shall not include any item described in paragraphs 7#a7 through 7#h74 7b7 ,exceptions 7#a7 ,certain real property 7,a7 ,in general ,for purposes of this subchapter1 the term derivative shall not include any contract with respect to interests in real property 7as defined in section #hef7;c77#e77;,c77 if such contract requires physical delivery of such real property4 7,b7 ,options to settle in cash 7i7 ,in general ,for purposes of subparagraph 7,a71 a contract which provides for an option of cash settlement shall not be treated as requiring physical delivery of real property unless the option is-- 7,i7 not exercisable unconditionally1 and 7,,ii7 exercisable only in unusual and exceptional circumstances4 7ii7 ,option of cash settlement ,for purposes of clause 7i71 a contract provides an option of cash settlement if the contract settles in 7or could be settled in7 cash or property other than the underlying real property4 7#b7 ,securities lending1 sale-repurchase1 and similar financing transactions ,to the extent provided by the ,secretary1 for purposes of this subchapter1 the term derivative shall not include the right to the return of the same or substantially identical securities transferred in a securities lending transaction1 sale-repurchase transaction1 or similar financing transaction4 7#c7 ,options received in connection with the performance of services ,for purposes of this subchapter1 the term derivative shall not include any option described in section #hc7;e77#c7 received in connection with the performance of services4 7#d7 ,insurance contracts1 annuities1 and endowments ,for purposes of this subchapter1 the term derivative shall not include any insurance1 annuity1 or endowment contract issued by an insurance company to which subchapter ,l applies 7or issued by any foreign corporation to which such subchapter would apply if such foreign corporation were a domestic corporation74 7#e7 ,derivatives with respect to stock of members of same worldwide affiliated group ,for purposes of this subchapter1 the term derivative shall not include any derivative 7determined without regard to this paragraph7 with respect to stock issued by any member of the same worldwide affiliated group 7as defined in section #hfd7;f77 in which the taxpayer is a member4 7#f7 ,commodities used in normal course of trade or business ,for purposes of this subchapter1 the term derivative shall not include any contract with respect to any commodity if-- 7,a7 such contract requires physical delivery with the option of cash settlement only in unusual and exceptional circumstances1 and 7,b7 such commodity is used 7and is used in quantities with respect to which such derivative relates7 in the normal course of the taxpayer's trade or business 7or1 in the case of an individual1 for personal consumption74 7c7 ,contracts with embedded derivative components 7#a7 ,in general ,if a contract has derivative and nonderivative components1 then each derivative component shall be treated as a derivative for purposes of this subchapter4 ,if the derivative component cannot be separately valued1 then the entire contract shall be treated as a derivative for purposes of this subchapter4 7#b7 ,exception for certain embedded derivative components of debt instruments ,a debt instrument shall not be treated as having a derivative component merely because-- 7,a7 such debt instrument is denominated in a nonfunctional currency 7as defined in section #ihh7;c77#a77;,c77ii771 or 7,b7 payments with respect to such debt instrument are determined by reference to the value of a nonfunctional currency 7as so defined74 7d7 ,treatment of ,american ,depository ,receipts and similar instruments ,except as otherwise provided by the ,secretary1 for purposes of this subchapter1 ,american depository receipts 7and similar instruments7 with respect to shares of stock in foreign corporations shall be treated as shares of stock in such foreign corporations4 4 7b7 ,information reporting with respect to controlled foreign corporations ,section #fjch7;a77#a77;,b7 of such ,code is amended by inserting and transactions which are covered transactions for purposes of section #ddge by reason of the application of section #ddge7;h77#a7 to such corporation before the semicolon at the end4 7c7 ,conforming amendment ,the table of subchapters for chapter #cf of such ,code is amended by inserting after the item relating to subchapter ,b the following new item3 ,subchapter ,c4 ,tax on trading transactions4 4 7d7 ,effective date ,the amendments made by this section shall apply to transactions after ,december #ca1 #bjai4