NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8410
SPONSOR: Steck
 
TITLE OF BILL: An act to amend the tax law, in relation to rebates on
stock transfer tax paid
 
PURPOSE OR GENERAL IDEA OF BILL:
Since at least 1915, New York has imposed a tax on the sale of securi-
ties. 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 justi-
fiable.
 
SUMMARY OF PROVISIONS:
The rebate would be 60% of the tax collected. Accordingly, $6.4 billion
in revenue would be raised.
 
JUSTIFICATION:
The tax was essentially repealed as part of the over-exuberance about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 writ-
ten 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 compa-
ny, 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.
 
LEGISLATIVE HISTORY:
As indicated above.
 
FISCAL IMPLICATIONS:
As indicated above.
 
EFFECTIVE DATE: January 1, 2015.
STATE OF NEW YORK
________________________________________________________________________
8410
IN ASSEMBLY
January 15, 2014
___________
Introduced by M. of A. STECK -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to rebates on stock transfer
tax paid
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 1 of section 280-a of the tax law, as amended
2 by chapter 578 of the laws of 1981, is amended to read as follows:
3 1. Except as otherwise provided in subdivision fifteen of this
4 section, where a tax shall have been paid under this article a portion
5 of the amount paid shall be allowed as a rebate and such portion shall
6 be paid to the taxpayer but only to the extent that moneys are available
7 for the payment of such rebates in the stock transfer incentive fund
8 established pursuant to section ninety-two-i of the state finance law.
9 The portion of the amount of tax paid which is to be allowed as a rebate
10 shall be thirty percent of the tax incurred and paid on transactions
11 subject to the stock transfer tax occurring on and after October first,
12 nineteen hundred seventy-nine and on or before September thirtieth,
13 nineteen hundred eighty and sixty percent of the tax incurred and paid
14 on such transactions occurring on and after October first, nineteen
15 hundred eighty and on or before September thirtieth, nineteen hundred
16 eighty-one and all of the amount of tax incurred and paid shall be
17 allowed as a rebate on transactions subject to the stock transfer tax
18 occurring on and after October first, nineteen hundred eighty-one and on
19 or before September thirtieth, two thousand fifteen and sixty percent of
20 the amount of tax incurred and paid shall be allowed as a rebate on
21 transactions subject to the stock transfer tax occurring on and after
22 October first, two thousand fifteen.
23 § 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
A LBD13369-01-3