Stock trade tax scaled back but still opposed by finance industry
Despite concessions that a state lawmaker considers significant, financial industry officials are still pushing back hard against a proposed tax that would be levied on many stock trades run through New Jersey servers.
It’s believed that the tax in its latest incarnation would raise a half-billion dollars a year. The bill was discussed in an Assembly committee Monday, but it had been announced in advance that no vote was yet planned.
Assemblyman John McKeon, D-Essex, said the proposal was changed in two ways in response to industry objections: It would phase out after two years, and the rate would be one one-hundredth of a penny instead of a quarter of a penny.
“We’d like to have an extra billion dollars over the next two years in order to deal with the obligations quite sadly that have been caused by this COVID emergency,” said McKeon.
The state plans to borrow $4.5 billion as revenue for its 2021 state budget and intends to repay that over 12 years.
Terry Campbell, vice president of global government relations for Nasdaq, which has already tested a relocation of its New Jersey-based trades to computers in Illinois, said the tax would backfire because trading platforms will move transactions to servers in other states.
“Your residents, investors, retirees will all be harmed, and with all due respect it’s the wrong way to fix your state budget,” Campbell said.
“No, it’s not going to raise a billion dollars,” said James Angel, a business professor at Georgetown University. “It will be a net revenue loser for the state of New Jersey.”
The New York Stock Exchange might move its data center to Texas. Hope Jarkowski, co-head of government relations for the NYSE’s parent, Intercontinental Exchange Inc., said that since 2014, New Jersey has already gone from the largest to the sixth-largest data center market in the country.
“And the imposition of an FTT (financial transaction tax) would represent a total collapse in the state support for the financial services industry,” Jarkowski said.
Eric Sivertsen, executive director of the Northern New Jersey chapter of the National Electrical Contractors, said that would be particularly devastating for companies that build data centers and are then contracted to maintain them.
“Some fear that they might even have to close their doors,” Sivertsen said.
To the extent the tax would be levied, not avoided through data-center relocations, managing director Nancy Lancia of the Securities Industry and Financial Markets Association, said it would affect pensions, charities, university endowments and people trying to save for college or retirement.
“While some think this is a tax on Wall Street, it is a tax on workers,” Lancia said.
Lancia said 78% of Americans with incomes of $20,000 and households with incomes of $40,000 are in retirement plans and could have the tax passed onto them.
Michael Symons is State House bureau chief for New Jersey 101.5. Contact him at firstname.lastname@example.org.