Illinois legislator says GameStop saga should give new life to financial transaction tax proposal

(The Center Square) — The frenzy around retail investors buying GameStop and other stocks to buck Wall Street hedge funds has caught the attention of elected officials in Illinois.

For years, state Rep. Mary Flowers, D-Chicago, has filed a measure to tax each financial transaction – like a stock trade – in the state of Illinois. It never advanced. But she said there may be new life after collective action invested in GameStop stock, exposing tactics of hedge funds that bet stocks would fail.

“I think people probably didn’t understand it before the GameStop and the GameStop made everybody stop and pause and take a look and get a better understanding, and as a result, they said ‘wow,’” Flowers said.

But, there were other things the GameStop saga highlighted. Stock purchasing applications were blocking users from certain trades. Flowers said there may have to be state regulations there too.

“We regulated Amazon,” Flowers said. “People said that couldn’t be done. We have to regulate it.”

Flowers downplayed some that have said a tax on financial transactions in Illinois would lead to major trading houses, such as the Chicago Mercantile Exchange, leaving the state.

The measure also grabbed the attention of the U.S. Congress.

U.S. Rep. Rodney Davis, R-Taylorville, said he’s not an expert in the stock market or the applications some use to buy stocks.

“I don’t understand what [stock trading application] Robinhood’s difference is versus TD Ameritrade,” Davis told WMAY. “So should Congress investigate? I don’t have the answer, but it doesn’t matter because they’re going to.”

Davis said he feared, as is the case with many things in D.C., the issue would get mired in politics. But, he said it’s important the free market be upheld.

“We have to be very careful to ensure that we don’t limit what we’re capable of in this country of growing through our economy and allowing people to grow in their retirement plans and their 401(k)s or just, if that’s their interest in trading stocks, hey, let’s not hinder their ability to do that,” Davis said.

The U.S. House Financial Services Committee on Feb. 18 will hold a hearing titled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media and Retail Investors Collide.”

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