By Beth Markman
A small tax on Wall Street trades would raise substantial revenue and reduce high-speed trading, and it would do so in a very progressive manner. However, lobbying giants have been fighting proposed financial transaction taxes because of the impact they would have on the financial services industry, and especially on those who profit from high-speed trading. We conclude that the inside-Washington battle over the FTT is an unfair fight, with money and influence drowning out debate on the merits of the proposals.
- Nine out of the ten organizations that have the most lobbyists working on FTT issues strongly oppose the tax.
- The three organizations with the most lobbyists fighting the FTT are all lobbying giants: the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Investment Company Institute.
- Groups that lobby on the FTT, many of which are enormous financial services entities, donated more than $32 million to members of Congress and national party committees in the 2018 election cycle and more than $41 million in 2020. The largest campaign contributor of the FTT lobbyists in the 2018 and 2020 cycles combined was Charles Schwab, which gave $13.9 million.
- Key members of the U.S. House Committee on Ways and Means and House Committee on Financial Services have received significant donations from anti-FTT lobbying entities. For example, Rep. Patrick McHenry (R-N.C.), Ranking Member of the House Financial Services Committee, is arguably the most vocal opponent of the FTT in Congress and received the second highest amount of money from FTT lobbying groups out of any member of the House. McHenry received $703,930 from them in the 2018 and 2020 election cycles.
- Republican Party committees received nearly twice as much money from entities lobbying on the FTT as Democratic Party committees in the past two election cycles.
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There are 43 organizations that listed the FTT as a specific issue that they lobbied on in the 116th Congress, which culminated at the end of 2020. [Appendix] The forces opposing the FTT are much greater. There are many advocacy groups that are championing the FTT, including a coalition of 68 groups that signed a letter to Congress in favor of the Wall Street Tax of 2021. However, many of these organizations engage in public education and grassroots organizing instead of lobbying. The huge sums of lobbying dollars, and in turn the direct influence, are in the hands of huge corporations and trade associations that hire large numbers of lobbyists.
Organizations that are fighting the FTT include enormous financial service corporations and trade organizations that are pushing a false narrative that an FTT would harm average investors. Of the 10 organizations that have the most lobbyists working on the FTT, nine have released public statements of opposition against the tax. [Table I]
Table I: Top 10 Groups Lobbying on the FTT by Number of Lobbyists Working on This Issue Area (2019-2020)
|Lobbying Client||# of Lobbyists Working on the FTT||Stance on FTT|
|U.S. Chamber of Commerce||40||Oppose|
|Securities Industry and Financial Markets Association||27||Oppose|
|Investment Company Institute||25||Oppose|
|American Retirement Association||17||Oppose|
|Managed Funds Association||17||Oppose|
|CME Group, Inc.||13||Oppose|
|AARP||8||No Public Statement|
|Nationwide Mutual Insurance Company||6||Oppose|
Source: Public Citizen’s analysis of data from lobbying disclosures published by the Senate Office of Public Records (https://lda.senate.gov/filings/public/filing/search/)
The U.S. Chamber of Commerce is the largest lobbying group in the U.S., spending tens of millions of dollars each year in support of its pro-corporate agenda.
The U.S. Chamber claims to represent “companies of all sizes across every sector of the economy,” but unlike local chambers of commerce that support small businesses and economic growth for Main Street, the U.S. Chamber engages in lobbying and electioneering to advance the political agendas of large corporations. The FTT would have little, if any, effect on Main Street.
The U.S. Chamber is a nonprofit trade association, meaning it can accept unlimited donations without revealing its donors. Due to disclosure from other sources, we know that the Chamber receives many donations from large corporations.
The Chamber’s refusal to reveal its donors combined with its extensive electioneering and lobbying activities make it one of the biggest spenders of dark money in Washington. Dark money contributions are used by the U.S. Chamber to promote big-business policies that limit consumers’ rights, oppose workplace safety reform, weaken financial reform, favor fossil fuels, and restrict access to health care. The Chamber also spends millions on elections, supporting candidates with pro-business agendas that do not reflect the needs of average Americans.
SIFMA is a trade association for investment banks, broker-dealers, and asset managers. SIFMA’s members represent 75% of the U.S. broker-dealer sector and 50% of the asset management sector.
SIFMA lobbies on a variety of issues ranging from infrastructure to privacy, but primarily focuses on policies related to domestic and global financial markets. The financial transaction tax is one of 27 lobbying issue areas listed on its website. The trade group consistently spends the most money on federal lobbying of any firm in the financial markets industry, surpassing large financial service firms including Goldman Sachs and the Vanguard Group. SIFMA’s political action committee also contributes hundreds of thousands of dollars to candidates each election cycle.
ICI is a trade association for regulated fund companies. Membership is open to any investment company registered with the Securities and Exchange Commission, including mutual funds, closed-end funds, exchange-traded funds, and unit investment trusts. ICI Global manages similar funds worldwide. According to its website, ICI’s members manage $25.8 trillion in assets in the United States and an additional $8.3 trillion in assets internationally.
The main policy areas that ICI lobbies for are fund regulation, retirement security, trading and markets, fund management, and taxes. ICI donates to candidates through ICI PAC. A majority of these donations go to Republican candidates. ICI has been lobbying against financial transaction taxes for more than 10 years and maintains a “Financial Transaction Tax Resource Center” on its website.
The ARA is a national organization for retirement plan professionals. It is made up of five retirement industry organizations: the American Society of Pension Professionals & Actuaries (ASPPA), the American Society of Enrolled Actuaries (ASEA), the National Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA).
The ARA primarily advocates for the private employer-sponsored retirement plan system, lobbying on bills related to that topic. The ARA claims it opposes the FTT because it would hurt ordinary investors.  In reality, retirement savers might come out ahead under an FTT because they would be incentivized to invest in index funds or other products with low portfolio turnover. Switching to such funds would result in investors paying less in transaction costs and lower fees to financial advisors that are part of the ARA. These savings could exceed the costs of an FTT because the fees relating to transactions and fund management far exceed the costs that would result from proposed FTTs.
In addition to creating incentives to invest in low turnover funds, an FTT would benefit retirement investors in other ways. For instance, an FTT would disincentivize high-speed trading practices that cause large retirement funds to receive less favorable prices on their purchases and sales of securities. High-speed traders obtain better prices by using unfair practices to jump to the front of the line by fractions of a second.
MFA is a trade association for the hedge and managed futures fund industries. Its members include prominent hedge fund managers like D.E. Shaw and Renaissance Technologies. MFA supports the growth of the hedge fund industry internationally and is politically active in the United States, United Kingdom, Belgium, and multiple Asian countries.
MFA is considered one of the most powerful trade associations in Washington. Because most investors in hedge funds are large corporations and high net worth individuals, MFA’s agenda is to shield its ultra-wealthy clients from progressive taxes such as the FTT. MFA is leveraging its lobbying heft to fight FTTs by publishing biased information about the effects of an FTT on retirement savers, as well as writing letters and testifying against state level FTTs. In addition to fighting the FTT, MFA’s U.S. policy priorities are in the areas of regulatory coordination, market data, tax exemptions, position limits, short selling, uncleared margin rules, swaps trading framework, SEC advertising rules and cybersecurity.
CME Group is the world’s largest financial derivatives marketplace. CME Group has four exchanges: CME, CBOT, NYMEX and COMEX. CME offers financial products including futures contracts and options for interest rates, energy, agricultural products, metals, equity indexes, and foreign exchange. CME also runs CME Globex, an electronic trading platform, CME Clearing, which is a clearinghouse and settlement service for exchange-traded and over-the-counter derivatives. CME Group was described by The Economist as “the biggest financial exchange you have never heard of.”
CME Group lobbies on a variety of policies that benefit its stakeholders, in particular lobbying for a tax code that favors big business. CME Group strongly opposes any financial transaction taxes, but many of its claims are biased. For example, CME lists a neutral report by the Tax Policy Center first on a web page of “studies highlighting the damaging impacts of a financial transaction tax” even though this report also highlights many benefits of the tax. CME selectively quotes parts of the report favorable to its case. The CME group also donates to many candidates through its political action committee.
AARP is an interest group focusing on issues facing Americans over age fifty. AARP has 38 million members who receive benefits related to finances, insurance, health, technology and shopping. AARP spends tens of millions on lobbying but does not contribute to candidates or parties.
AARP started lobbying on the FTT at the end of 2020, indicating in its lobbying report that it “discussed federal tax on financial transactions.” AARP has not released an official statement about its stance on the FTT. However, in its 2021-2022 Policy Book, AARP stated that “reforming business taxes, such as the corporate tax or a tax on the financial industry, should be considered in any effort to raise additional revenue.”
Nasdaq, Inc. is a financial services corporation that owns the Nasdaq stock market in New York as well as the Nasdaq Nordic. The Nasdaq stock market is the second largest equities exchange in the world by market capitalization of shares traded. Nasdaq Nordic includes OMX Exchanges, which owns eight European stock exchanges, and includes OMX Technology, which creates market systems for financial transactions that are used by many stock exchanges.
Nasdaq lobbies for issues that affect its stock exchange, listing capital formation, stock option accounting, Sarbanes-Oxley, immigration reform, legal reform, and taxes among its policy priorities. Nasdaq’s agenda prioritizes policies that benefit large publicly traded corporations. These goals do not speak to the interests of average Americans, whose wealth is largely disconnected from the stock market. The wealthiest 10% of Americans own more than 80% of the capital in the U.S. stock market. While Nasdaq claims that it is “Econ 101” to be against the FTT, Nasdaq likely bases that view on its own economic prospects.
Vanguard Group is one of the largest investment companies in the world. With about $6.2 trillion in global assets, Vanguard is the largest provider of mutual funds and the second largest provider of exchange-traded funds. In addition, Vanguard offers a variety of other investment services including financial planning, asset management, variable and fixed annuities, and brokerage services. Vanguard is owned by the funds that it manages, meaning that it is owned by its own clients.
Vanguard maintains a PAC that is funded by Vanguard officers. Vanguard lobbies on a large variety of issue areas, claiming to “promote policies that uphold the best interests of our shareholders.”
However, when it comes to Vanguard’s lobbying against the FTT, Vanguard misleads the public with biased reports that severely overestimate the effect of the tax on regular investors. For example, Vanguard issued a paper in 2019 that claimed a 0.1% FTT would impose onerous costs on retirement savers. The conclusion relied on an assumption that retirement savers’ money would be invested in actively managed funds, which have very high turnover and are relatively obscure compared to Vanguard’s signature products. The vast majority of Vanguard’s customers invest in index funds that have very low turnover. The company later admitted that the costs of the same FTT to investors in index funds would be only one-twentieth as much as it estimated in its 2019 paper.
Nationwide Mutual Insurance Company is an insurance and financial services company. It has dozens of affiliated companies that focus on domestic property and casualty insurance, life insurance, retirement savings, asset management, and strategic investments. In addition to these areas of focus, Nationwide provides a wide variety of services related to insurance, investing, banking, and life planning.
This corporation lobbies on a variety of issues related to the insurance and financial services that it provides. Nationwide Mutual Insurance Company PAC also contributes to candidates, a majority of whom are Republicans.
Many of the organizations that lobby on the FTT also exert their influence by contributing to congressional campaigns. The 43 groups that lobby on the FTT gave $32.2 million in 2018 and $41.8 million in 2020 to members of Congress and party committees. This represents an enormous amount of corporate influence wielded with members of Congress.
Of the 20 FTT-lobbying groups that contributed the most in political contributions in the past two election cycles, 15 oppose the FTT. [Table II]
Table II: The 20 Organizations Lobbying on the FTT That Gave the Most in Campaign Contributions in the 2018 and 2020 Election Cycles
|Donor Organization||2018 and 2020 Election Cycle Contributions||Stance on FTT|
|American Federation of Teachers||$5,338,250||Support|
|American Federation of State, County, and Municipal Employees||$4,951,400||Support|
|United Auto Workers||$4,047,000||Support|
|Investment Company Institute||$3,301,240||Oppose|
|Communications Workers of America||$3,177,008||Support|
|Fierce Government Relations||$2,108,000||Oppose|
|Ogilvy Government Relations / WPP Group||$1,304,564||Oppose|
|Securities Industry and Financial Markets Association||$1,079,699||Oppose|
|U.S. Chamber of Commerce||$971,148||Oppose|
Source: Public Citizen’s analysis of data from the Center for Responsive Politics (www.opensecrets.org).
Many of these groups gave more in the 2020 cycle than in the 2018 cycle. This may represent their concern over the increasingly popular FTT proposals. Looking only at the top 20 campaign contributors, six groups increased their donations by more than 50%. The group that increased its contribution by the greatest percentage was the Chamber of Commerce, which gave $268,798 in 2018 and $702,350 in 2020. Charles Schwab, the largest overall donor, increased its contribution from $4.7 million in 2018 to $9.1 million in 2020.
While many groups, including unions and nonprofits, strongly support the FTT, many corporate insiders with deep pockets are fighting to keep this policy from being implemented. Organizations such as the U.S. Chamber of Commerce use dark money to advance a corporate agenda that does not prioritize the needs of average Americans.
The FTT has not even received a dedicated hearing in Congress in recent years despite growing support as shown by endorsements from multiple presidential candidates during the 2020 race, including then-candidates Joe Biden and Kamala Harris. The lack of movement of this tax through Congress is likely in part because of opposition from key members of Congress who receive enormous donations from anti-FTT organizations.
While this report includes all of the organizations that explicitly included the FTT in their lobbying disclosure reports, this report has clear shortcomings due to the lack of specificity called for in the law. Our inability to include organizations that use vague language in their LDA reports prevents us from painting a clear picture of all of the key players seeking to influence this debate. We recommend reform that would require organizations to use more specific terms in their lobbying disclosure reports.
We also recommend that organizations be required to state their position on the issues they lobby on. While many organizations have issued statements of support or opposition, very few indicate their stance in their lobbying disclosure reports. A requirement that they do so would allow the public and advocates on both sides to obtain a clearer picture of what lobbying dollars are being used for.
It is our hope that by revealing the most powerful FTT lobbying players, members of Congress will feel pressure to give the FTT a fair hearing in full public view.
 A minuscule fee on transactions is paid by brokerages to the Securities and Exchange Commission. Brokerages often charge their customers this fee, which is typically less than 10 cents per trade, to cover their costs. See, Fee Rate Advisory #2 for Fiscal Year 2021, Securities and Exchange Commission Jan. 15, 2021), https://www.sec.gov/news/press-release/2021-8.
 Wall Street Act of 2021, H.R. 328, 117th Cong. (2021).
 Press Release, U.S. Chamber of Commerce, U.S. Chamber Releases Report on the Negative Impacts a Financial Transaction Tax Would Have on Investors, Taxpayers, and Consumers (September 16, 2019), https://bit.ly/3w90nMR.
 Matteo Aquilina, Eric Budish & Peter O’Neill. Quantifying the High-Frequency Trading “Arms Race”: A Simple New Methodology and Estimates, Financial Conduct Authority (January 2020), https://bit.ly/3un4yU0.
 Educate Policymakers About the Negative Consequences of a Financial Transaction Tax for Investors, Jobs, and the Economy, Managed Funds Association (viewed on March 29, 2021), https://bit.ly/3m2rlkM.
 About MFA, supra note 24.
 Fierce Government Relations is on behalf of Managed Funds Association.
 Subject Matter is on behalf of Securities Industry and Financial Markets Association.
 CGCN Group is on behalf of Investment Company Institute.
 Ogilvy Government Relations and WPP Group lobbied on behalf of CME Group.
 Capital Counsel is on behalf of American Retirement Association.
 Table IV includes only lobbying groups that are in the top 20 contributors list in Table II.
 Press Release, Financial services committee republicans, All Republican Financial Services Members Sign Resolutions Detailing Devastating Impacts of Democrats’ Proposed Federal Financial Transaction Tax (March 17, 2021), https://bit.ly/3tjc1Cf.
 Patrick McHenry, Amendment to the Views and Estimates of the Committee on Financial Services Offered on Matters to be Set Forth in the Concurrent Resolution on the Budget for Fiscal Year 2021, 117th Cong. (2021), https://bit.ly/3nY4b05.
 Protecting Retirement Savers and Everyday Investors Act, H.R. 8695, 116th Cong. (2020).
 Table V includes only lobbying groups that are in the top 20 contributors list in Table II.
 John Harwood, Biden: We Should Have a Financial Transaction Tax, CNBC (December 6, 2019), https://cnb.cx/2PFymMe What Kamala Harris Means for Wall Street and Silicon Valley, The New York Times (Aug. 20, 2020), https://nyti.ms/2Rbycxt.