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A03353 Summary:

BILL NOA03353A
 
SAME ASSAME AS S01406-A
 
SPONSORSteck
 
COSPNSRJacobson, Stirpe, Englebright, Burke, Gottfried, Epstein, Perry, Simon, Lupardo, Hunter, Reyes, Abinanti, Williams, Barron, Kim, Benedetto, Rosenthal L, Joyner, Wallace, Fahy, Dinowitz, Cruz, Rivera J, Taylor, Dickens, Gunther, Seawright, Richardson, De La Rosa, Carroll, Glick, Davila, Fernandez, Cook, Bronson, Bichotte Hermelyn, Darling, Anderson, Niou, Walker, O'Donnell, Meeks, Kelles, Rivera JD, Lunsford, Jean-Pierre, Zinerman, Clark, Frontus, McDonald, Burdick, Fall, Sillitti, Septimo, Jackson
 
MLTSPNSRAubry, Hyndman
 
Rpld §280-a, amd §270, Tax L; rpld §92-i, amd §§92-b & 93-b, St Fin L; rpld §11-503 sub (c), §11-604 sub 12, NYC Ad Cd; add §3-0323, En Con L
 
Repeals the rebates for stock transfer tax paid; dedicates funds of the stock transfer tax fund and stock transfer incentive fund to various funds; establishes the safe water and infrastructure action program.
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A03353 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3353A
 
SPONSOR: Steck
  TITLE OF BILL: An act to amend the state finance law, in relation to the repeal of the rebate for stock transfer tax paid and the funds of the stock transfer tax fund and the dedicated infrastructure investment fund; to amend the environmental conservation law, in relation to establishing the safe water infrastructure action program for the purpose of making payments toward the replacement and rehabilitation of existing local municipal- ly-owned and funded drinking water, storm water and sanitary sewer systems; to amend the tax law, in relation to taxes imposed in certain transactions; to repeal section 280-a of the tax law relating to the rebate for stock transfer tax paid; to repeal section 92-i of the state finance law relating to the stock transfer incentive fund; and to repeal certain provisions of the administrative code of the city of New York relating thereto     PURPOSE OR GENERAL IDEA OF BILL: To repeal the electronic rebate of the stock transfer tax, collect 100% of this tax and dedicate the funds to the state general fund commencing with the fiscal year and ending March 31, 2023, after which 100% of the funds collected with the deposited into the following: the Metropolitan Transportation Authority (MTA), the maintenance and repair of state highways and bridges (NYSDOT), the New Your City Housing Authority (NYCHA), the infrastructure, maintenance and development of passenger rail lines for AMTRAK in the northeast corridor, the Consolidated Local Street and Highway Improvement Program (CHIPS), the municipal aid and incentives program, (AIM), the safe water and infrastructure action program, the downstate and upstate transits systems, the clean energy fund, CUNY, and SUNY.   SUMMARY OF PROVISIONS: Section 1. To repeal the electronic rebate of the stock transfer tax, collect 100% of this tax and dedicate the funds to the state general fund commencing with the fiscal year and ending March 31, 2023, after which 100% of the funds collected will be deposited into the following: i. Twenty-five percent shall be directed to the Metropolitan Transporta- tion Authority(MTA)Financial Assistance fund ii. Ten percent shall be directed to the maintenance and repair of the New York City Housing Authority (NYCHA) iii. Fifteen percent shall directed to the Highway and Bridge Capital Account in the dedicated highway and bridge trust fund (NYSDOT) iv. Nine percent shall be directed towards the infrastructure, mainte- nance and development of passenger rail lines for AMTRAK in the North- east Corridor v. Five percent shall be directed to the Consolidated Local Street and Highway Improvement Program (CHIPS) vi. Five percent shall be directed to the safe water and infrastructure action program (SWAP: as established by section 8) vii. Five percent shall be directed to the Municipal Assistance State Aid Fund (AIM) viii. Four percent shall be directed to the Downstate Transit System ix. Four percent shall be directed to the Upstate Transit System x. Thirteen percent shall be directed to the Clean Energy Fund (NYSERDA) xi. Two and one-half percent to CUNY xii. Two and one-half percent to SUNY Section 8: Establishes the Safe Water and Infrastructure Action Program; a stream of funding to local governments state-wide for the repair, maintenance and capital improvement of drinking water, storm water and sewer systems Section 9: Provides for the stock transfer tax to be collected should any activity in furtherance of the transaction occur in the State of New York or if any party involved in the transaction satisfies a nexus with New York State which shall be defined as broadly as it is permitted under the United States constitution. Subdivision 3. Provides for the purchaser to pay the tax and not the seller, unless the purchaser and seller agree to allocate the tax amongst themselves. Subdivision 3-a. Provides that no person shall have legal title or ownership of any stock or certificates provided for under this article unless proof of purchase is provided in the form of either a) a receipt reflecting the amount of the tax, that the tax was paid and that it was paid in full; or b) the tax was remitted via the tax stamp method provided for in subdivision 4 of this section. Section 10: Effective Date.   JUSTIFICATION: From 1905 to 1981, New York State imposed a tax on the sale of securi- ties. 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. New York State has failing infrastructure state-wide. Roads, bridges, the New York City Housing Authority, public transit both_upstate and downstate, passenger rail, water and sewer infrastructure, are all in massive disrepair. To transform New York State's failing infrastructure, we must commit tc raising revenue. Conservatively, the stock transfer tax will raise approximately $13 billion annually (based upon a 10 year average of collections). There is no other revenue stream, with the exception of the raising the state income tax, that will immediately raise this level of revenue. For years New York State has not committed to raising the revenue neces- sary to fund such basic programs as CHIPS and AIM to a level that can actually achieve results. Our passenger rail system is multiple decades behind those of Europe and our public transportation system in the city of New York is being supported by fees and taxes on low- and middle-in- come individuals. On February 15, 2019, Comptroller DiNapoli issued a statement warning that state revenue is sagging and released the January revenue numbers showing a decline in projected revenue to the state of more than $2 billion. In that statement, DiNapoli said the state needs to prepare for the economy slowing down. "New York's revenue picture is increasingly challenged. The final Janu- ary revenue numbers for the state released by my office today confirm the substantial shortfall the Governor and I announced earlier this month. In addition, the Division of the Budget's updated financial plan reduces projected tax receipts in the coming years by billions of dollars," DiNapoli said in a statement. "Given the unpredictable revenue environment we now face, we should take an extremely cautious approach when negotiating next year's budget. As one step, I urge the Governor and Legislature to make the prudent finan- cial decision to substantially build up the state's reserves to help better prepare for an economic downturn." The budget picture worsened with Covid so that the State is currently running a deficit of about $15 billion per year, hence the need for an immediate infusion into the general fund. The stock transfer tax is a revenue generator that operates as an indi- rect tax, rather than a direct tax like property or income. Stocks are also predominantly owned by the wealthiest of Americans. The top 10% of American households, as defined by total wealth, now own 84% of all stocks in 2016, according to a recent paper by NYU economist Edward N. Wolff. Furthermore, while virtually all (94%) of the very rich reported having significant stock holdings-as defined as $10,000 or more in shares-only 27% of the middle class did. (The study framed that middle class as the group between the poorest 20% and the richest 20% of Ameri- cans--"The Richest 10% of Americans Now Own 84% of All Stocks" By ROB WILE Money Magazine December 19, 2017). The stock transfer tax is infinitesimal, as the schedule from the New York State Department of Taxation and Finance shows below: * Sale or agreement to sell at less than $5 per share has tax rate of 1 1/4 cents * Sale at$5or more but less than $10 per share has tax rate of 21/2 cents * Sale at$10or more but less than $20 per share has tax rate of 33/4 cents * Sale at$20or more per share has tax rate of 5 cents * Transfers of stock or certificates of interest other than by sale has tax rate of 2 1/2 cents While the tax itself is infinitesimal, the volume of trading is what drives this revenue stream to at least $11 billion. During financial crises, trading volume increases (thus increasing the stock transfer tax revenue), while income and property tax revenues decrease. This revenue will offset decreased state income tax collections and local property tax collections and has the potential to stabilize our state budget when our direct tax revenues are falling. Which, according to Comptroller DiNapoli, is happening now. Due to recent global events, New York State finds itself in a fiscal crisis that must be addressed, and makes this legislation is all the more necessary, Additional benefits of this legislation would be the economic boom created by this revenue stream in employment, construction materials and other ancillary businesses. With significant investment in infrastructure, property values increase bene- fitting local governments including school districts. Unlike the tempo- rary federal investment in infrastructure following the Great Recession of 2008, this would be an annual collection and investment. This legis- lation also directs investment into the Clean Energy Fund, which would. spur dramatic growth in the renewables sector with the goal of ending our dependence on fossil fuels. To prevent retirees from paying the tax when selling their stock, the payment of the tax is limited to those making the purchase, unless there is an agreement between the purchaser and the seller to allocate the tax amongst themselves. Additionally, no person shall have title or owner- ship of the stock or certificate unless they have a receipt documenting the amount of the tax paid and the amount was paid in full or remitted the tax stamp method provided for in subdivision 4 of this section.   LEGISLATIVE HISTORY: 2019: S.6203 Referred to Senate Budget and Revenue A.7791 Referred to Assembly Ways and Means 2020: S.6203-A Referred to Senate Budget and Revenue A.7791-B Referred to Assembly Ways and Means   FISCAL IMPLICATIONS: This bill could increase revenue for the state General Fund by at least $11 billion for the first two state fiscal years. Thereafter, this revenue would go to various programs listed above.   EFFECTIVE DATE: Immediately
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