Wall Street tax must be international: Pelosi

WASHINGTON Thu Nov 19, 2009 6:02pm EST

Speaker of the House Nancy Pelosi (R) with Majority Leader Steny Hoyer (D-MD) arrives at a news conference about the House vote on health care reform on Capitol Hill in Washington November 7, 2009. REUTERS/Yuri Gripas

Speaker of the House Nancy Pelosi (R) with Majority Leader Steny Hoyer (D-MD) arrives at a news conference about the House vote on health care reform on Capitol Hill in Washington November 7, 2009.

Credit: Reuters/Yuri Gripas

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WASHINGTON (Reuters) - Any tax imposed on financial transactions would have to take effect internationally to keep Wall Street jobs and related business from moving overseas, U.S. House of Representatives Speaker Nancy Pelosi said on Thursday.

"It would have to be an international rule, not just a U.S. rule," Pelosi said at a news conference. "We couldn't do it alone, we'd have to do it as an international initiative."

Several House Democrats have proposed a Wall Street tax to pay for job-creating legislation they plan to pass in December. The tax, which could raise $150 billion per year, would tap into widespread public outrage at Wall Street in the wake of the financial crisis.

"There's something really out of kilter in this society," said Democratic Representative Marcy Kaptur, noting the gap between wages in her Ohio district and Wall Street bonuses.

But support is tepid among key legislators, especially those from the New York region who worry that finance jobs could disappear if the tax drives trading activity overseas.

The No. 4 Democrat in the House, Representative John Larson, said his proposal to impose a 0.25 percent tax on over-the-counter derivatives transactions would apply internationally.

"Part of our proposal would include that it would be international," Larson told Reuters after meeting with other lawmakers about the jobs package.

Democratic Representative Peter DeFazio said his separate proposal, which would tax a wider array of trading activity, would cover all U.S. corporations and individuals no matter where their trades took place.

Pelosi and other Democratic leaders have emphasized that the proposal is merely one of many ideas in play.

"It hasn't been developed to a high priority, but it has substantial currency in our caucus," Pelosi said.

Britain urged other governments earlier this month to consider a bank tax as a way to fund future bailouts, and France and Germany have also called for a bank tax. The International Monetary Fund is studying the idea.

LITTLE ADMINISTRATION SUPPORT

But it has little support in the Obama administration.

Treasury Secretary Timothy Geithner said on Thursday that he has "not seen a version of that tax that I think would be appropriate for our country."

Democrats are developing their jobs bill to ease double-digit unemployment levels that threaten an economic recovery. The Senate is expected to act early next year.

Increased road construction, money to help states avoid layoffs of police and other public employees, and a further extension of unemployment benefits are some of the elements under consideration, Pelosi said.

Other options include extending health-insurance subsidies for the jobless, a tax credit for businesses that create jobs, more funding for energy-efficiency programs, and low-interest loans for small businesses.

Funding for these initiatives could come from a transaction tax or by using leftover money from last year's $700 billion Troubled Asset Relief Program, a federal government program to buy assets and equity from financial institutions.

Lawmakers could also pay for the package over a five-year time period to avoid imposing tax increases or spending cuts that may hurt the nation's fragile economy.

Democrats passed a broader $787 billion stimulus bill earlier this year, but less than half has been spent.

A bipartisan group of at least 120 House lawmakers said on Thursday they had set up a "jobs caucus" to ensure that rank-and-file members, not just senior lawmakers, get a chance to shape the bill.

Their proposals included easing business regulations, revamping trade agreements, and extending existing tax breaks.

(Editing by Paul Simao and Vicki Allen)

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