With the specter of significant slashes in federal funding for New York state, there is now a renewed push to revive its tax on stock sales, Bloomberg reports.
According to Bloomberg, the levy would function like a sales tax on goods and services, with stock buyers paying, on average, half a penny per dollar of stock based on a proposed legislation by a group of Democratic state lawmakers who are estimating a tax like this will earn the state as much as $16 billion a year, Bloomberg says. The revenue would be allocated to New York City’s transit system, K-12 education, healthcare and renewable energy projects, the lawmakers noted.
New York started taxing stock sales back in 1905. However, by 1981, the levy was phased out. Advocates say New York needs to revive the stock trading tax now as U.S. states and cities throughout the country gear up for potential federal funding cuts given the Trump administration's efforts to reduce spending.
Close to 40 percent of New York’s operating budget relies on federal dollars and the Metropolitan Transportation Authority (MTA), which is a state-run agency that operates New York City’s transit system. The MTA is expecting $14 billion of federal money in its 2025-2029 capital plan, Bloomberg reports.
“The stock transfer tax is designed to restore some sense of balance to the economic system,” Assemblyman Phil Steck, a sponsor of the bill, noted Wednesday outside the New York Stock Exchange, during a gathering of elected officials and community activists. “It can address the parts of New York state that are being hollowed out.”
However, the prospects for the New York proposal to become law are low given that legislative leaders do not support it, Steck noted in an interview.
New York City's transportation projects and possibly those across the state might get less federal support as U.S. Department of Transportation Secretary Sean Duffy is signaling that he would withhold approvals and might be mulling freezing federal funds if the MTA persists on imposing a congestion pricing toll on motorists driving into parts of Manhattan. President Donald Trump has promised to end the fee, which became effective on Jan. 5.
As an alternative to taxing the securities sector that offered $20 billion in revenue to New York's fiscal 2024 budget, the state should reserve the money now to make up for any decrease in federal funding later, Patrick Orecki, director of state studies at the Citizens Budget Commission, told Bloomberg. The concern is that Intercontinental Exchange, which owns the New York Stock Exchange, would move the clearing house to another state.
“I wouldn’t want to give the industry another reason to move or expand elsewhere because they’re such an important piece of the puzzle for the state right now,” Orecki noted. “The industry is very important to the state’s economy and to the state’s public finances.”