New York Financial Heavyweights Attack Stock Transfer Tax Plan

Wall Street on Wednesday blasted legislative efforts to reinstate a New York state tax on traded stocks.

Twenty-six organizations led by the Securities Industry and Financial Markets Association, whose members include Goldman Sachs & Co., JP Morgan Chase & Co., Ameriprise Financial, and Fidelity Investments, called on Gov. Andrew Cuomo (D) and top leaders in the state Senate and Assembly to oppose legislative efforts to revive a surcharge on financial market transactions.

“This is a tax on end investors,” according to a joint letter signed by the NASDAQ, the New York Stock Exchange, Managed Funds Association, and the American Securities Association, among others. The groups, which represent more than half a million employees in the financial services industry, argue that a targeted tax on financial markets would hurt the state’s economy and business environment, and increase the cost of investing for everyday savers and investors.

“New York is facing budget deficits and economic uncertainty that will only be made worse by adding a tax that diminishes financial market activity in the state,” the letter said.

Progressive New York Democrats are currently pushing legislation (S6203A) to resurrect a state tax on stock trades to help close a projected four-year revenue loss, estimated at $39 billion.

Lawmakers argue that reinstating the tax would help to raise $13 billion annually, helping to avert cuts to services like education and healthcare during a pandemic. Proponents of the revenue raiser describe it as a progressive sales tax that would impose a nickel levy on every $100 traded on exchanges.

“It’s not a tax on Wall Street,” Assembly Member Phil Steck, a sponsor of a bill (A03353) to restore the levy, said on a Jan. 27 call with union leaders. “It’s just collected by Wall Street.”

Banks and brokers have been pushing back on legislative efforts to revive a tax on financial market transactions that ended in 1981, when the New York Stock Exchange was considering leaving Wall Street.

In the signed letter, they argue that with more Americans working remotely and the increased prevalence of electronic trading, there are fewer barriers to trading firms’ relocating. New York would be on the only state to impose such a tax.

“Accelerating the trend of securities industry jobs moving to other states would cause further devastation to the New York economy, which is already suffering from the impact of the Covid-19 pandemic,” SIFMA President and CEO Kenneth E. Bentsen, Jr. said in a statement, calling it a “terrible policy move.”

The added tax measure wasn’t among the numerous initiatives included in Cuomo’s fiscal 2022 budget proposal.

Freeman Klopott, a spokesman for the state budget office, said Wednesday that the governor would review the bill if it passed, but he warned that it would cause firms to shift trading elsewhere.

“In the digital age, it would be even easier for transactions to simply be moved out of state to avoid the tax,” he said.