New York is now in SOS mode: we need to Save Our State!
As things stand, and without any federal aid, New York State will face austerity for the next four years or more. Some in Albany have suggested cutting all public spending by 20% as a solution. That means solving austerity by imposing more austerity!
But the solution lies in our own hands: it is the Stock Transfer Tax. This small excise tax on stock trades amounts to pennies per share to be paid by investors. It generated roughly $16 billion in 2010. And given stock market activity, it is likely to generate more in 2020 and in years to come. So this tax will cover our state deficit, estimated to be $14 billion this year; also in years to come.
The New York Stock Transfer Tax has been law since 1905, but since 1981, the money has been rebated 100% to the investors who pay it. Anytime within two years after payment, the investor fills out a return form (MT-650), submits it to the state, and the state immediately credits the money back to the investor.
Now, Assembly Bill A7791 would end the rebate, automatically crediting billions of dollars to the State’s general fund for the benefit of all New Yorkers. In order to prevent or oppose Wall Street speculation, the underlying stock transfer tax rate should be linked to a person’s trading volume: the lower the trading volume, the lower the tax. This would help diminish the wild and speculative volatility that caused many of Wall Street’s and America’s problems in recent years.
Some state legislators want to wait and see if Washington comes through with aid to our state before they do anything about collecting the Stock Transfer Tax. Yet waiting for federal aid has so far left us all dangling in the wind. And many are now faced with eviction, foreclosure, homelessness, no/poor quality health care, and/or food insecurity because of no federal aid to New York.
Other Albany legislators are fearful that collecting this tax will cause businesses to flee our state, workers’ 401K’s to lose money, and the New York Stock Exchange to leave Manhattan.
The pandemic plus the recession have already destroyed a large number of small businesses. And given the situation around the country, where would other businesses go? Since workers’ 401K accounts do not involve wild and frequent casino-like speculation on Wall Street, there is no reason to claim that the Stock Transfer Tax would cause them to lose money. It also cannot be claimed that if Albany collected the Tax, Wall Street would flee into cyberspace. After all, New York State is already effective in collecting State taxes on out-of-state purchases made over the internet.
Ending the rebate and placing the Stock Transfer Tax in the State’s general fund for the benefit of all New Yorkers would strengthen faith in the social contract between our government and the people of New York. Equally important, it would demonstrate to the entire country that New York State elected officials act with integrity, and are courageously willing to prevent the losses that the Trump administration and Republican-dominated Senate wish, increasingly, to visit on our fair state.
Mary Ann Castle, PhD
Planning Alternatives for Change
Gene Grabiner, Ph.D.
SUNY Distinguished Service Professor Emeritus