119-hr4035

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4035 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 4035

 To amend the Internal Revenue Code of 1986 to impose a tax on certain 
 trading transactions.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 June 17, 2025

Ms. Hoyle of Oregon (for herself, Mr. Smith of Washington, Ms. Jayapal, 
 Mr. McGovern, Ms. Pingree, Ms. Schakowsky, Ms. Tlaib, and Mrs. Watson 
 Coleman) introduced the following bill; which was referred to the 
 Committee on Ways and Means

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to impose a tax on certain 
 trading transactions.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Wall Street Tax Act of 2025''.

SEC. 2. TRANSACTION TAX.

    (a) In General.--Chapter 36 of the Internal Revenue Code of 1986 is 
amended by inserting after subchapter B the following new subchapter:

 ``Subchapter C--Tax on Trading Transactions

``

Sec. 4475. Tax on trading transactions.
``

Sec. 4476. Derivative defined.

``

SEC. 4475. TAX ON TRADING TRANSACTIONS.

 ``

    (a) Imposition of Tax.--There is hereby imposed a tax on each 
covered transaction with respect to any security.
 ``

    (b) Rate of Tax.--
 ``

    (1) In general.--The tax imposed under subsection

    (a) with respect to any covered transaction shall be the applicable 
 percentage of the specified base amount with respect to such 
 covered transaction.
 ``

    (2) Applicable percentage.--For purposes of this 
 subsection, the applicable percentage shall be--
 ``
        (A) in the case of a covered transaction after 
 December 31, 2025, and before January 1, 2027, 0.02 
 percent,
 ``
        (B) in the case of a covered transaction after 
 December 31, 2026, and before January 1, 2028, 0.04 
 percent,
 ``
            (C) in the case of a covered transaction after 
 December 31, 2027, and before January 1, 2029, 0.06 
 percent,
 ``
            (D) in the case of a covered transaction after 
 December 31, 2028, and before January 1, 2030, 0.08 
 percent, and
 ``
        (E) in the case of a covered transaction after 
 December 31, 2029, 0.1 percent.
 ``
            (c) Specified Base Amount.--For purposes of this section, the 
term `specified base amount' means--
 ``

    (1) except as provided in paragraph

    (2) , the fair market 
 value of a security (determined as of the time of the covered 
 transaction), and
 ``

    (2) in the case of any payment with respect to a 
 derivative, the amount of such payment.
 ``
            (d) Covered Transaction.--For purposes of this section--
 ``

    (1) In general.--The term `covered transaction' means--
 ``
        (A) except as provided in subparagraph
        (B) , any 
 purchase if--
 ``
            (i) such purchase occurs on, or is 
 subject to the rules of, a qualified board or 
 exchange located in the United States, or
 ``
            (ii) the purchaser or seller is a United 
 States person, and
 ``
        (B) any transaction with respect to a derivative 
 if--
 ``
            (i) such derivative is traded on, or is 
 subject to the rules of, a qualified board or 
 exchange located in the United States, or
 ``
            (ii) any party with rights under such 
 derivative is a United States person.
 ``

    (2) Exception for initial issues.--No tax shall be 
 imposed under subsection

    (a) on any covered transaction with 
 respect to the initial issuance of any security described in 
 subparagraph
        (A) ,
        (B) , or
            (C) of subsection

    (e)

    (1) .
 ``

    (e) Definitions and Special Rules.--For purposes of this 
section--
 ``

    (1) Security.--For purposes of this section, the term 
 `security' means--
 ``
        (A) any share of stock in a corporation,
 ``
        (B) any partnership or beneficial ownership 
 interest in a partnership or trust,
 ``
            (C) except as provided in paragraph

    (2) , any 
 note, bond, debenture, or other evidence of 
 indebtedness, and
 ``
            (D) any derivative (as defined in 

section 4476).
 ``

    (2) Exception for certain traded short-term 
 indebtedness.--A note, bond, debenture, or other evidence of 
 indebtedness which--
 ``
        (A) is traded on, or is subject to the rules of, 
 a qualified board or exchange located in the United 
 States, and
 ``
        (B) has a fixed maturity of not more than 100 
 days,
 shall not be treated as described in paragraph

    (1)
            (C) .
 ``

    (3) Qualified board or exchange.--The term `qualified 
 board or exchange' has the meaning given such term by 

section 1256

    (g)

    (7) .
 ``

    (f) By Whom Paid.--
 ``

    (1) In general.--The tax imposed by this section shall be 
 paid by--
 ``
        (A) in the case of a transaction which occurs on, 
 or is subject to the rules of, a qualified board or 
 exchange located in the United States, such qualified 
 board or exchange, and
 ``
        (B) in the case of a purchase not described in 
 subparagraph
        (A) which is executed by a broker (as 
 defined in 

section 6045
            (c) (1) ) which is a United States 
 person, such broker.
 ``

    (2) Special rules for direct, etc., transactions.--In the 
 case of any transaction to which paragraph

    (1) does not apply, 
 the tax imposed by this section shall be paid by--
 ``
        (A) in the case of a transaction described in 
 subsection
            (d) (1)
        (A) --
 ``
            (i) the purchaser if the purchaser is a 
 United States person, and
 ``
            (ii) the seller if the purchaser is not a 
 United States person, and
 ``
        (B) in the case of a transaction described in 
 subsection
            (d) (1)
        (B) --
 ``
            (i) the payor if the payor is a United 
 States person, and
 ``
            (ii) the payee if the payor is not a 
 United States person.
 ``

    (g) Treatment of Exchanges and Payments With Respect to 
Derivatives.--For purposes of this section--
 ``

    (1) Treatment of exchanges.--
 ``
        (A) 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 exchange.
 ``
        (B) Certain deemed exchanges.--In the case of a 
 distribution treated as an exchange for stock under 
 

section 302 or 331, the corporation making such 
 distribution shall be treated as having purchased such 
 stock for purposes of this section.
 ``

    (2) Payments with respect to derivatives treated as 
 separate transactions.--Except as otherwise provided by the 
 Secretary, any payment with respect to any derivative shall be 
 treated as a separate transaction for purposes of this section.
 ``

    (h) Application to Transactions by Controlled Foreign 
Corporations.--
 ``

    (1) In general.--For purposes of this section, a 
 controlled foreign corporation shall be treated as a United 
 States person.
 ``

    (2) Special rules for payment of tax on direct, etc., 
 transactions.--In the case of any transaction which is a 
 covered transaction solely by reason of paragraph

    (1) and which 
 is not described in subsection

    (f)

    (1) --
 ``
        (A) Payment by united states shareholders.--Any 
 tax which would (but for this paragraph) be payable 
 under subsection

    (f)

    (2) by the controlled foreign 
 corporation shall, in lieu thereof, be paid by the 
 United States shareholders of such controlled foreign 
 corporation as provided in subparagraph
        (B) .
 ``
        (B) Pro rata shares.--Each such United States 
 shareholder shall pay the same proportion of such tax 
 as--
 ``
            (i) the stock which such United States 
 shareholder owns (within the meaning of 

section 958

    (a) ) in such controlled foreign corporation, 
 bears to
 ``
            (ii) the stock so owned by all United 
 States shareholders in such controlled foreign 
 corporation.
 ``
            (C) === Definitions. ===
-For purposes of this 
 subsection, the terms `United States shareholder' and 
 `controlled foreign corporation' have the meanings 
 given such terms in sections 951

    (b) and 957

    (a) , 
 respectively.
 ``
            (i) Administration.--The Secretary shall carry out this section 
in consultation with the Securities and Exchange Commission and the 
Commodity Futures Trading Commission.
 ``

    (j) Guidance; Regulations.--The Secretary shall--
 ``

    (1) provide guidance regarding such information reporting 
 concerning covered transactions as the Secretary deems 
 appropriate, and
 ``

    (2) prescribe such regulations as are necessary or 
 appropriate to prevent avoidance of the purposes of this 
 section, including the use of non-United States persons in such 
 transactions.

``

SEC. 4476. DERIVATIVE DEFINED.

 ``

    (a) In General.--For purposes of this subchapter, except as 
otherwise provided in this section, the term `derivative' means any 
contract (including any option, forward contract, futures contract, 
short position, swap, or similar contract) the value of which, or any 
payment or other transfer with respect to which, is (directly or 
indirectly) determined by reference to one or more of the following:
 ``

    (1) Any share of stock in a corporation.
 ``

    (2) Any partnership or beneficial ownership interest in a 
 partnership or trust.
 ``

    (3) Any evidence of indebtedness.
 ``

    (4) Except as provided in subsection

    (b)

    (1) , any real 
 property.
 ``

    (5) Any commodity which is actively traded (within the 
 meaning of 

section 1092
            (d) (1) ).
 ``

    (6) Any currency.
 ``

    (7) Any rate, price, amount, index, formula, or 
 algorithm.
 ``

    (8) Any other item as the Secretary may prescribe.
Except as provided in regulations prescribed by the Secretary to 
prevent the avoidance of the purposes of this subchapter, such term 
shall not include any item described in paragraphs

    (1) through

    (8) .
 ``

    (b) Exceptions.--
 ``

    (1) Certain real property.--
 ``
        (A) In general.--For purposes of this subchapter, 
 the term `derivative' shall not include any contract 
 with respect to interests in real property (as defined 
 in 

section 856
            (c) (5)
            (C) ) if such contract requires 
 physical delivery of such real property.
 ``
        (B) Options to settle in cash.--
 ``
            (i) In general.--For purposes of 
 subparagraph
        (A) , 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--
 ``
            (I) not exercisable 
 unconditionally, and
 ``
            (II) exercisable only in unusual 
 and exceptional circumstances.
 ``
            (ii) Option of cash settlement.--For 
 purposes of clause
            (i) , a contract provides an 
 option of cash settlement if the contract 
 settles in (or could be settled in) cash or 
 property other than the underlying real 
 property.
 ``

    (2) Securities lending, sale-repurchase, and similar 
 financing transactions.--To the extent provided by the 
 Secretary, for purposes of this subchapter, the term 
 `derivative' shall not include the right to the return of the 
 same or substantially identical securities transferred in a 
 securities lending transaction, sale-repurchase transaction, or 
 similar financing transaction.
 ``

    (3) Options received in connection with the performance 
 of services.--For purposes of this subchapter, the term 
 `derivative' shall not include any option described in 

section 83

    (e)

    (3) received in connection with the performance of 
 services.
 ``

    (4) Insurance contracts, annuities, and endowments.--For 
 purposes of this subchapter, the term `derivative' shall not 
 include any insurance, annuity, or endowment contract issued by 
 an insurance company to which subchapter L applies (or issued 
 by any foreign corporation to which such subchapter would apply 
 if such foreign corporation were a domestic corporation).
 ``

    (5) Derivatives with respect to stock of members of same 
 worldwide affiliated group.--For purposes of this subchapter, 
 the term `derivative' shall not include any derivative 
 (determined without regard to this paragraph) with respect to 
 stock issued by any member of the same worldwide affiliated 
 group (as defined in 

section 864

    (f) ) in which the taxpayer is a 
 member.
 ``

    (6) Commodities used in normal course of trade or 
 business.--For purposes of this subchapter, the term 
 `derivative' shall not include any contract with respect to any 
 commodity if--
 ``
        (A) such contract requires physical delivery with 
 the option of cash settlement only in unusual and 
 exceptional circumstances, and
 ``
        (B) such commodity is used (and is used in 
 quantities with respect to which such derivative 
 relates) in the normal course of the taxpayer's trade 
 or business (or, in the case of an individual, for 
 personal consumption).
 ``
            (c) Contracts With Embedded Derivative Components.--
 ``

    (1) In general.--If a contract has derivative and 
 nonderivative components, then each derivative component shall 
 be treated as a derivative for purposes of this subchapter. If 
 the derivative component cannot be separately valued, then the 
 entire contract shall be treated as a derivative for purposes 
 of this subchapter.
 ``

    (2) Exception for certain embedded derivative components 
 of debt instruments.--A debt instrument shall not be treated as 
 having a derivative component merely because--
 ``
        (A) such debt instrument is denominated in a 
 nonfunctional currency (as defined in 

section 988
            (c) (1)
            (C) 
            (ii) ), or
 ``
        (B) payments with respect to such debt instrument 
 are determined by reference to the value of a 
 nonfunctional currency (as so defined).
 ``
            (d) Treatment of American Depository Receipts and Similar 
Instruments.--Except as otherwise provided by the Secretary, for 
purposes of this subchapter, American depository receipts (and similar 
instruments) with respect to shares of stock in foreign corporations 
shall be treated as shares of stock in such foreign corporations.''.

    (b) Information Reporting With Respect to Controlled Foreign 
Corporations.--

Section 6038

    (a)

    (1)
        (B) of such Code is amended by 
inserting ``and transactions which are covered transactions for 
purposes of 

section 4475 by reason of the application of 

section 4475

    (h)

    (1) to such corporation'' before the semicolon at the end.
            (c) Conforming Amendment.--The table of subchapters for chapter 36 
of such Code is amended by inserting after the item relating to 
subchapter B the following new item:

 ``subchapter c. tax on trading transactions''.
            (d) Effective Date.--The amendments made by this section shall 
apply to transactions after December 31, 2025.
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