New York Financial Groups Urge State Leaders to Oppose Stock-Transfer Tax Proposal

By Jimmy Vielkind 

ALBANY, N.Y. -- Major financial exchanges and securities industry groups on Wednesday urged New York state lawmakers to not support a proposal being pushed by some Democrats and unions to impose taxes on stock sales.

In a letter to Gov. Andrew Cuomo and leaders of the state Assembly and Senate, the exchanges said any tax would prompt the relocation of securities industry firms and jobs out of New York and would also be passed along to investors and public pension funds. The letter's 27 signatories include Nasdaq Inc., the New York Stock Exchange, groups representing downstate businesses and the Securities Industry and Financial Markets Association, or Simfa, which represents financial firms.

"Such a tax would damage New York's position as a global financial capital, resulting in shrinkage of an industry that is the largest contributor to our economy and tax base," the letter says.

Sifma President and CEO Kenneth Bentsen Jr. said in an interview that the groups sent the letter because a number of new legislators, including Democrats who support a transaction tax, have recently taken office.

Rebecca Bailin, director of the pro-tax Invest in Our New York campaign, said the letter showed Wall Street firms were on the defensive and said threats to move were empty. State Assemblyman Phil Steck, an Albany-area Democrat who supports a stock-transfer tax, said any impact on individual investors would be minuscule compared with the positive effects of additional state spending on infrastructure.

Mr. Steck estimated the tax could generate around $11 billion a year for the state.

"This is a progressive sales tax," he said.

New York enacted a stock transfer tax in 1905 but stopped collecting it in 1981. Democratic legislators have introduced bills for more than a decade to reimpose the tax -- which runs as high as 5 cents on a share priced at $20 or more -- but none have come to the floor. Supporters of a stock-transfer tax say it would raise additional revenue as the state confronts a budget deficit.

Both state Assembly Speaker Carl Heastie, a Democrat from the Bronx, and Senate Majority Leader Andrea Stewart-Cousins, a Democrat from Yonkers, said they were considering a financial transaction tax to raise more revenue for education and other social service programs funded by the state. They are negotiating a budget agreement with Mr. Cuomo; the state's current budget expires on March 31.

Mr. Cuomo, a Democrat, proposed increasing income-tax rates last month as he addressed an $8.2 billion deficit in a $193 billion budget. His budget director, Robert Mujica, said at the time that the governor didn't support a financial transaction tax and that the pandemic showed that people could easily move business operations. A spokesman for the governor said he would review the letter.

No other states tax financial transactions, which members of the securities industry have lobbied against at the federal level. In September, NYSE threatened to move electronic trading systems out of New Jersey if the state implemented a tax on financial transactions, which had the support of the state's Democratic governor, Phil Murphy.

An October report by state Comptroller Tom DiNapoli found 182,100 New Yorkers were employed in the securities industry in 2019, but the state's share of industry jobs has fallen to 19% in 2019 from one-third in 1990. Mr. DiNapoli, a Democrat, estimated the industry was responsible for 17% of economic activity in New York City and accounted for 18% of state tax revenues.

Write to Jimmy Vielkind at [e-mail]

(END) Dow Jones Newswires

February 03, 2021 14:26 ET (19:26 GMT)

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