Relates to rebates on stock transfer tax paid; decreases amount to sixty percent; dedicates funds of the stock transfer tax fund to the dedicated infrastructure investment fund.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9666
SPONSOR: Steck TITLE OF BILL:
An act to amend the tax law, in relation to rebates on stock transfer
tax paid; to amend the state finance law, in relation to the funds of
the stock transfer tax fund and the dedicated infrastructure investment
fund
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. New York State has failing infrastructure state-wide. We have
not committed to raising revenue to support our infrastructure needs,
therefore we must raise revenue to address them.
SUMMARY OF PROVISIONS:
The rebate would be 60% of the tax collected. Accordingly, $6.4 billion
in revenue would be raised. All funds netted after the administration of
the collection are dedicated to the Dedicated Infrastructure Investment
Fund.
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The tax was essentially repealed as part of the over-exuberance about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 exter-
nalities costs it does not pay for on the rest of society. The total
costs of the financial crisis for which they bear significant responsi-
bility is in the trillions of dollars. Flash trading and other specu-
lation may create volatility, but not really create value: the overall
efficiency of the market economy may even be reduced. Through our bail-
outs 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 individ-
uals from the poor into the middle class.
LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS:
As indicated above.
EFFECTIVE DATE:
January 1, 2019.
