H.R. 4035: Wall Street Tax Act of 2025

This bill, titled the "Wall Street Tax Act of 2025," seeks to introduce a new tax on certain trading transactions involving securities in the United States. Here is a breakdown of its main components:

Transaction Tax

The bill proposes an imposition of a tax on each covered transaction related to any security. A "covered transaction" includes purchases made on qualified exchanges in the U.S. or transactions involving U.S. persons.

Tax Rate Structure

The applicable tax rate will vary depending on the year of the transaction:

• 0.02% for transactions after December 31, 2025, and before January 1, 2027.
• 0.04% for transactions after December 31, 2026, and before January 1, 2028.
• 0.06% for transactions after December 31, 2027, and before January 1, 2029.
• 0.08% for transactions after December 31, 2028, and before January 1, 2030.
• 0.1% for transactions after December 31, 2029.

Definitions

• Specified Base Amount: This refers to the fair market value of a security at the time of the transaction or the payment amount regarding a derivative.
• Security: Security includes stocks, partnership interests, financial instruments like notes or bonds, and derivatives.
• Derivative: A derivative is a financial contract whose value is derived from an underlying asset, such as stocks, bonds, or commodities.

Tax Payment Responsibility

The tax is primarily to be paid by the exchanges or brokers involved in the transactions. For transactions not executed by exchanges, U.S. persons (either buyers or sellers) will be responsible for the tax payment.

Exceptions

The bill states certain exemptions:

• No tax applies to initial security issuances.
• Some short-term debt instruments and derivatives may be exempted if they meet specific criteria.

Administration and Regulation

The Secretary of the Treasury will oversee the implementation of this tax in consultation with regulatory bodies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). They will also provide guidance on reporting requirements concerning covered transactions.

Effective Date

The tax will apply to transactions that occur after December 31, 2025.

Relevant Companies

• GS (Goldman Sachs Group Inc.): A major player in securities trading could see an impact on transaction costs.
• MS (Morgan Stanley): As a financial services firm, its trading operations may incur additional taxes on covered transactions.
• AMTD (AMTD Digital Inc.): As a financial services platform, any trading activities will be affected by the new transaction tax.