Share transfer tax gains traction in New York budget debate (1)


New York state lawmakers are expected to weigh various Democratic revenue-raising proposals on Tuesday for a budget deal to help close the state’s $ 15 billion deficit.

At the top of the list: a bill to resurrect a state tax on stock transactions. The tax, last used in 1981, has gained a solid political footing in the assembly – and even lawmakers in Washington are reigniting the debate on a financial transaction tax. The Wall Street heavyweights are doing all they can to put out both fronts.

Financial titans like the Securities Industry and Financial Markets Association, whose members include Goldman Sachs, JP Morgan Chase & Co. and Fidelity Investments, as well as the Business Council of New York State and the Partnerships for New York City have jumped on the calls. Zoom urging state lawmakers to drop the tax measure, arguing it would only force Wall Street to permanently flee lower Manhattan to tax havens like Texas and Florida.

“This is not a zero-sum game,” said Kathryn Wylde, president and CEO of Partnership for New York City, an association of business leaders. “We will go into the hole deeper. You will precipitate a depression in New York if these various taxes pass. The mistake in all of this is that the wealth creators are stuck in New York City as the world competes to move. “

Wall Street lobbyists ripped up a page of old sales manuals, lining up lobbyists and public relations firms to stop the tax, which they say would reduce business activity, decrease income and hurt average Americans who are saving for retirement.

“There is a principle in sales: fear, uncertainty and doubt,” said Assembly Member Phil Steck (R), main sponsor of a bill that would repeal a tax allowance, in an interview. tax on financial transactions. “That’s what they do, and there are certainly people vulnerable to that. “

A 1906 tax was never taken off the books, but in 1981 lawmakers instituted a refund, effectively killing the tax. Steck’s measure, along with a complementary Senate bill sponsored by Sen. James Sanders (D), would repeal the deduction.

Invoices under review

The share transfer tax is one of six tax proposals on the table for a budget deal. Tuesday’s meeting of the Senate Assembly’s Finance and Ways and Means Committees will determine whether any of them have enough support to earn a place in the tax package that policymakers must achieve by March 30.

Grassroots Democratic lawmakers are eager to push forward a number of progressive plans even as Washington implements a federal aid package, highlighting the long-term budget issues facing the state.

“We get new cosponsors every day,” said Steck, who aims to win at least five more signatures from the more than 50 Assembly members already supporting the legislation. He and Sanders have worked tirelessly to gain more cosponsors to pressure Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins ​​to include the measure.

“Speaker Heastie said supply must equal demand, so in terms of the proposition, nothing is being excluded,” said Kerri Biche, spokesperson for the speaker, in an email.

A competing bill by Senator Julia Salazar (D) and Assembly member Yuh-Line Niou would go further. This measure, S3890, would tax the trading activities of investment banks and hedge funds and tax transfers of stocks, bonds and derivatives.

“It tells me that people accept the concept even though they may disagree on how best to implement it,” Steck said.

Other revenue raising proposals that have been introduced include new progressive tax brackets, a “mark-to-market” tax and a measure to offset the benefits of corporate income tax from the United States. Federal tax law of 2017. Together, they would generate approximately $ 50 billion in new revenue in 2021.

The Steck-Sanders bill is expected to bring in up to $ 13 billion.

Lawmakers hope to avoid cutting $ 2 billion in funding for schools, $ 600 million in funding for Medicaid and $ 900 million in other cost cuts proposed in Governor Andrew Cuomo’s budget in January.

In addition to warning of massive departures of financial firms if New York reestablished transfer duties, opponents question whether the measure would apply even in an environment that has changed since the 1980s.

“The world has changed dramatically,” said Ken Pokalsky, vice president of government affairs for the Business Council of New York, referring to e-commerce. “There is a significant gray area as to whether a transaction would be subject to tax or not.”

Financial sector interests have also underscored that the industry is prepared to face any additional tax burdens.

Virtu Financial Inc. and others have threatened to leave New York if lawmakers imposed a tax on share transfers. The New York Stock Exchange has warned political leaders against this.

“Any friction means you move transactions out of tax jurisdiction, period,” Wylde said. “So they’re not going to collect any money at all.”

“They are strongly opposed to it,” said John Samuelsen, chairman of the Transport Workers Union Local 100, one of the largest local unions representing the Metropolitan Transportation Authority, which worked with Senate Democrats Timothy Kennedy and Leroy Comrie to make move the bill forward. cheeky.

“We have to stop being afraid of the reaction of the rich,” Samuelsen said. “We can’t just cut the bait and run away because the rich are threatening us. “

War on two fronts

A transfer tax, or financial transaction tax, long sought after by progressives and reformers on Wall Street, is also receiving special attention in Washington.

California Democrat Maxine Waters, who chairs the House Financial Services Committee, last week supported such a tax during a hearing into the GameStop Corp controversy.

Liberal Democrats like Sen. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have pushed the tax for years, arguing it could curb the kind of speculative betting that has led to chaotic market swings and would help fund programs like free tuition fees.

A bill introduced by Oregon Democrat Peter DeFazio, which proposes to impose a fee of 10 cents on every $ 100 of securities traded, has 13 co-sponsors.

New York City Mayor Bill de Blasio said in a budget hearing on Feb. 11 that he opposed a state tax on stock transactions, arguing it would make the state uncompetitive. But congressional action would avoid that impact, he said. Cuomo himself did not include the measure in his budget plan.


The plan has its critics, however. Some lawmakers are questioning the impact of the tax on the New York State Retirement Fund, which is the pension fund for public employees. Steck and union leaders tried to stress to members that there would be no impact on pension funds and that the proposed repeal of the rebate would not lead to an exodus.

On your mind for lawmakers, it is also the help they can expect from Washington. House Speaker Nancy Pelosi has raised the possibility that New York could get up to $ 50 billion under President Joe Biden’s $ 1.9 trillion relief plan, but negotiations are ongoing .

Financial services executives argue that with the government’s influx of cash, the need to seek revenue sources would be dramatically diminished, and they dismiss immediate concerns about long-term structural deficit issues.

“It’s two years away,” Pokalsky said. “You don’t know how much the economy is coming back on. You don’t know how much state tax revenue is coming in. You don’t know if the state will need new tax measures in fiscal year 2024. ”

But supporters of the tax are resisting efforts to delay consideration of a tax.

“In my experience, they are not willing to give anything,” said Gloria Middleton, president of Communications Workers of American Local 1180. “Everyone has to pay their fair share. We’re not asking for much.

Dozens of organizations sent a letter to legislative leaders in support of the measure ahead of the hearing.

“Wall Street is the only industry that has come out of this pandemic unscathed, and to continue paying its taxes, rather than funding schools, hospitals and the social safety net, is a grave injustice,” a coalition of unions, d ‘health facilities, environmental groups and community activists said in a letter.


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