Opinion: The plan to tax stock trades is a terrible idea

I was disturbed to see an announcement from Assembly Member Phil Steck stating he has partnered with state Sen. James Sanders to introduce a bill to repeal the rebate for New York State’s stock transfer tax. While the sponsors of this legislation claim this will raise significant revenue for New York, the bill also comes with several negative side effects. Reimposing this tax will drive the financial sector out of New York City and into states like Texas and Florida, inadvertently placing more of a burden on New Yorkers trying to save for retirement or for their children’s college funds while also failing to generate additional revenue for the state. The consequences would be dire, undercutting New York City’s position as the financial capital of the world.

New York State’s stock transfer tax was first introduced in 1905 and imposes a levy of 0.25% per stock transaction, with a cap of $350 on large transactions. At the time it was enacted, The New York Times warned the levy would drive Wall Street traders out of the city. We are already seeing firms leave New York for the Sun Belt. According to a report from Bloomberg, New York has already lost $1 trillion in assets under management as firms have aggressively staffed up new offices located in Dallas, Nashville and West Palm Beach. Combining this reality with the fact that no other states in the country impose a stock transfer tax, the danger cannot be understated. If Wall Street firms leave New York, the consequences for the state will be dire. 

Further, while many New Yorkers might be quick to support the reimposition of the stock transfer tax under the false assumption it will only tax the wealthy, this is a regressive tax that would impact anyone who trades on the market, from retail traders investing in meme stocks to hedge funds trading billions in assets. The reality is simple: the reinstatement of this tax would heavily inhibit economic growth within our state. If enacted, it would significantly reduce return-on-investment savings over time and make it substantially more difficult for working class families to save for college and retirement. Retirement accounts and pension funds, on which so many New Yorkers rely, would struggle to grow. 

There is no way around it: taxing New Yorkers more is not a solution to our state’s current economic crisis. In jurisdictions where similar taxes have been implemented, revenue collections do not meet expectations. They are, however, successful at driving financial institutions out of high-tax jurisdictions and into more business-friendly environments. New York families deserve relief. The stock transfer tax will only bring them further financial hardship. 

I am voting “no” on the stock transfer tax, and I encourage everyone to follow suit.