Relates to rebates on stock transfer tax paid; decreases amount to sixty percent.
TITLE OF BILL: An act to amend the tax law, in relation to rebates on stock transfer tax paid
GENERAL PURPOSE OF BILL:
Since at least 1915, New York has imposed a tax on the sale of securities. 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 justifiable.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends subdivision 1 of section 280-a of the tax law, as amended by chapter 578 of the laws of 1981, by providing for a rebate of 60% of the tax collected. Accordingly, $6.4 billion in revenue would be raised.
Section 2 of the bill sets forth an immediate effective date.
The tax was essentially repealed as part of the over-exuberance about stimulating the economy through tax cuts and unleashing the financial sector.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 written 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 company, 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 externalities (costs it does not pay for) on the rest of society. The total costs of the financial crisis for which they bear significant responsibility is in the trillions of dollars. Flash trading and other speculation may create volatility, but not really create value: the overall efficiency of the market economy may even be reduced. Through our bailouts 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 individuals from the poor into the middle class.
PRIOR LEGISLATIVE HISTORY:
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None other than indicated above.
This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 6901 IN SENATE March 27, 2014 ___________Introduced by Sen. AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to rebates on stock transfer tax paid THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 280-a of the tax law, as amended by chapter 578 of the laws of 1981, is amended to read as follows: 1. Except as otherwise provided in subdivision fifteen of this section, where a tax shall have been paid under this article a portion of the amount paid shall be allowed as a rebate and such portion shall be paid to the taxpayer but only to the extent that moneys are available for the payment of such rebates in the stock transfer incentive fund established pursuant to section ninety-two-i of the state finance law. The portion of the amount of tax paid which is to be allowed as a rebate shall be thirty percent of the tax incurred and paid on transactions subject to the stock transfer tax occurring on and after October first, nineteen hundred seventy-nine and on or before September thirtieth, nineteen hundred eighty and sixty percent of the tax incurred and paid on such transactions occurring on and after October first, nineteen hundred eighty and on or before September thirtieth, nineteen hundred eighty-one and all of the amount of tax incurred and paid shall be allowed as a rebate on transactions subject to the stock transfer tax occurring on and after October first, nineteen hundred eighty-one AND ON OR BEFORE SEPTEMBER THIRTIETH, TWO THOUSAND FIFTEEN AND SIXTY PERCENT OF THE AMOUNT OF TAX INCURRED AND PAID SHALL BE ALLOWED AS A REBATE ON TRANSACTIONS SUBJECT TO THE STOCK TRANSFER TAX OCCURRING ON AND AFTER OCTOBER FIRST, TWO THOUSAND FIFTEEN. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13369-01-3