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.
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
