Opinion: New York needs money. It’s time to tax stock trades.

Hong Kong and London already tax stock trades. Why shouldn’t New York?

People walk outside the New York Stock Exchange on March 6, 2024.

People walk outside the New York Stock Exchange on March 6, 2024. Spencer Platt/Getty Images

There’s a conveyor belt-like quality to our legislative calendar in Albany as we fall into the rote of budget deliberations leading up to the April 1st deadline. Each member has specific items they hope to navigate through their respective caucus before the governor and our legislative leadership close on what will likely be over a quarter of a trillion dollar spending plan.

Yet, often the big picture is lacking. 

The challenges we face

We would be remiss not to pause and put our state’s fiscal ritual in the broader context of the political precarity of our entire nation. We are still feeling the effects of an unprecedented mass death event that claimed over 1.1 million lives, including over 82,000 New Yorkers. Millions more are struggling with the ravages of long COVID. Yet, we are talking about hospital closures and cuts to Medicaid, which we know are lifelines to the very communities hardest hit by COVID-19. While the Legislature will restore many of the cuts, the crisis nonetheless remains with us.

We also endured a violent insurrection at the U.S. Capitol, which came close to derailing the peaceful democratic transition of power for the first time in the history of our beloved republic.  The fractious forces that rejected the legitimacy of President Biden’s 2020 electoral victory now control – by the thinnest of margins – the House of Representatives and are very invested in former President Trump being restored to power. Indeed, as a direct consequence of this ongoing bitter partisan divide, Republican governors in Texas, Florida, Arizona and Louisiana have weaponized hundreds of thousands of incoming asylum-seekers (people who are legally in the United States until their claim of asylum is adjudicated) by sending them to northern states like New York in the hopes of destabilizing their sister states to score political points.

New York City has had to scramble to accommodate 170,000 of these individuals, many of whom have been sent upstate, oftentimes families traveling with small children, at a cost in excess of $4 billion. A deeply divided federal government has been very slow to address immigration issues, leaving this failed national policy on Albany’s doorstep.

This additional stress on the local social-welfare, healthcare, and education systems comes as those systems are not fully recovered from the impacts from the pandemic, while the federal government has ended the COVID-19 era fiscal supports, causing child poverty and food as well housing insecurity to spike. Throughout the pandemic, thousands of essential civil servants in public safety, transit, education and healthcare lost their lives serving others. Subsequently, many more have opted to retire, leaving public employers at every level of government shorthanded with thousands and thousands of open positions. It's vital we rebuild this workforce for the challenges ahead.

It will require more money.

At the same time, New York state is grappling with decades of disinvestment in its most critical infrastructure as a result of an ongoing decline in federal aid that began in the Reagan era. According to the New York section of the American Society of Civil Engineers report card, our bridges earned a C- and our drinking water got a C-, while our roads, transit and wastewater earned an unacceptable D+. There is one North Country community where the water coming out of the tap is brown, yet the state Department of Health insists it is safe to drink, bringing up visions of Flint, Michigan.

While our physical plant was deteriorating and we were closing hospitals, decade after decade, New York state was one of the nation’s leading donor states to the federal government, sending hundreds of billions of dollars more to the national government than it received back. Similarly, we pay taxes to other states on resources like oil-based products brought to our state.

At the same time, New York has lost 14 seats in Congress over the last half century as our population has migrated to the southern states that New York has for so long subsidized.

Meanwhile, to help New York City’s mass transit system overcome a generation of chronic under investment, the MTA is imposing a controversial $15 per vehicle congestion fee for vehicles entering Manhattan south of 60th Street, which a number of unions are protesting because it would turn their members’ commute into a luxury good. 

Gov. Kathy Hochul is loath to raise taxes because she believes the state’s current level of taxation is responsible for a population outmigration of hundreds of thousands of residents that cost the state $6 billion dollars in annual revenue. Further, New York state has the sad distinction of having the starkest divide between the wealthy and the working class, with the average income of the bottom 99% just under $50,000, compared to the $2.2 million average income of the state’s top 1%. This disparity in income is bad for our state’s economy, as the bottom 99% lack sufficient disposable income to spend on products and services after high costs such as housing are paid.

But all is not lost. 

The solution: tax stock trades

A remedy is very much at hand in the form of New York state’s Stock Transfer Tax, which has been around since 1905. This tax imposed a tiny levy of 0.25% per stock transaction, with a cap of $350 on large transactions. When this stock transfer tax was first introduced, The New York Times sounded the alarm, warning that the levy would drive Wall Street traders out of lower Manhattan. In fact, the opposite happened, as other exchanges around the country closed and migrated to New York.

A similar levy has been on the books and producing revenue in London since the late 1600s. Another major exchange, Hong Kong, recently increased its 1% stock transfer tax to 1.3%, yet Goldman Sachs said the increase would have no effect on the market.

Nonetheless, in 1981, the state of New York decided to rebate all of the money collected by the levy back to Wall Street, which it has since done to the tune of $400 billion dollars. Along with my colleague state Sen. James Sanders, I have introduced a bill that would stop the bleeding, end the rebate and start putting this revenue back in service for every New Yorker. This would raise $14 billion or more annually and could be leveraged to raise considerably more. Wealthy individuals and corporations would not be able to move to other states to escape the stock transfer tax, since the trades would still flow through New York no matter where a person lives or on what computer they execute their trades.

A recent Siena College poll found that over two-thirds of New York voters, an “overwhelming majority,” support raising taxes on profitable corporations and the state’s wealthiest households. According to the survey, 81% of Democrats and 59% of non-affiliated voters would back higher levies on the richest of the rich. Pollsters found that such a move even had the support of 46% of the Republicans they surveyed, an unusually bipartisan result. 

It’s time for New York state to take its fate into its own hands by ending this ridiculous subsidy that has already cost us all so dearly.