TITLE OF BILL: An act to amend the tax law, in relation to rebates on
stock transfer tax paid
GENERAL PURPOSE OF BILL:
Since at least 1915, New York has imposed a tax on the sale of
securities. Nonetheless, the securities industry flourished in the
State. The State began rebating the tax in 1979 so that it is now 100%
rebated back to the industry. As explained below, the 100% rebate is
no longer justifiable.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends subdivision 1 of section 280-a of the tax
law, as amended by chapter 578 of the laws of 1981, by providing for a
rebate of 60% of the tax collected. Accordingly, $6.4 billion in
revenue would be raised.
Section 2 of the bill sets forth an immediate effective date.
The tax was essentially repealed as part of the over-exuberance about
stimulating the economy through tax cuts and unleashing the financial
sector. As Nobel Prize-winning economist Joseph Stiglitz, who has
written in favor of the tax, explained in 2013, that economic
philosophy encouraged speculation, did not promote investment, led to
economic collapse, and simply transferred wealth from the middle class
to the top of the economic spectrum, increasing unemployment and
income inequality to unprecedented levels. Stiglitz observed: "A major
change occurred in markets around the turn of this century: most
trading (some 61 percent in 2009, 53 percent in 2010) on the stock
exchange was done by computers trading with other computers, using
certain algorithms. Offers to buy and sell were based not on market
research, on informed views about the prospects of, say, steel or the
efficiency of a particular steel company, but rather in extracting
information from the pattern of prices and trades, and on whatever
other information a computer could absorb and process on the fly....
The financial sector has imposed enormous externalities (costs it does
not pay for) on the rest of society. The total costs of the financial
crisis for which they bear significant responsibility is in the
trillions of dollars. Flash trading and other speculation may create
volatility, but not really create value: the overall efficiency of the
market economy may even be reduced. Through our bailouts and a myriad
of hidden subsidies, we have in fact been effectively subsidizing the
financial sector." Other countries have imposed this tax without any
reduction in productivity or efficiency, including Germany, the
leading economy in Europe, England, Japan, and Australia, to name only
a few. The revenue is needed to fund rebuilding our deteriorating
infrastructure, scientific research, and education, all of which have
proven historically to cause economic growth, raise the earning power
of the middle class, which stimulates the economy, and raise many
individuals from the poor into the middle class.
PRIOR LEGISLATIVE HISTORY:
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None other than indicated above.
This act shall take effect immediately.