BILL NUMBER:  S1132A

 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, $6.9 billion in
revenue would be raised.

Section 2 of the bill sets forth an immediate effective date.

 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The tax was essentially repealed as part of the over-exuberance about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
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
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 individuals
from the poor into the middle class.

 PRIOR LEGISLATIVE HISTORY :

None.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :

None other than indicated above.
 EFFECTIVE DATE :
This act shall take effect immediately.