invest in our new york - an faq

Won’t this hurt the middle class and pension funds?

There will be a small cost for the middle class. Among the middle 20% of households, the average cost increase would be $13 in a single year” if one assumes a tax rate of “one-tenth of 1 percent.” Using this same methodology, we would get an estimated cost of $65 in a single year for the same group of people, which is not burdensome, particularly considering the $12-29 billion in revenue that would be raised from the wealthiest.
Only half of families in the United States have retirement accounts at all. There is also a major race division when it comes to the wealth held in retirement accounts: a “large majority of Black and Latino working-age households—62 percent and 69 percent, respectively—do not own assets in a retirement account” at all.
The wealthiest 10% of Americans owned 84% of all stocks in 2016, whereas the bottom 60% owned only 1.8% of stocks. Therefore, a tax on stocks and other financial instruments would be well-targeted at the wealthiest Americans.

Won’t the exchanges just move?

The tax will be levied based on both the location of where the trade is executed and the residency of a party to the transaction.
This ensures that transactions being conducted by New York State residents and firms will still be taxed, even if the exchanges are not located in New York State.
However, we think it is unlikely that major exchanges will move in response to a tax.

How will we tax derivatives and bonds?

Bonds would be taxed at a rate of 0.1%, with some exceptions carved out (e.g., state and local bonds are not taxed)
Derivatives would be taxed at a rate of 0.005%
Since many bond and derivative trades do not take place on New York Stock exchanges, this tax will be applied based on the residency of a party to the trade.

What kind of derivatives are we taxing?

This would cover derivatives related to currencies, commodities, and indexes, as well as options contracts, futures contracts, notional principal contracts, and any similar financial instrument.
The tax rate of 0.005% would apply to the cash transfer value of derivatives (the amount of money that changes hands), as opposed to the notional value (the value of the underlying asset in a derivative).

How were the tax rates determined?

The rates were selected to raise substantial revenue, while also remaining comparable to the rates used in other major financial centers around the world.
Moreover, the rates were selected so that they would target the wealthy without being burdensome to the average person.

How does this differ from the Stock Transfer Tax that already exists and the Stock Buyback Tax that was proposed?

The Stock Transfer Tax that has been proposed in the NYS legislature seeks to repeal the 100% rebate of the existing tax on stocks.
The rate of the old stock transfer tax was set back in 1905, going up only as high as five cents per share for a stock that sells at $20 or more per share. This leaves a lot uncovered, and unfairly favors larger stock trades. With shares of Facebook trading at more than $250 per share in November 2020, the old stock transfer tax would only collect $0.05 per share per transaction, but this proposal would collect $1.25. There is no principled reason to use the rate that was set in 1905, especially because other financial centers in the world have adopted higher rates.
The Stock Buyback Tax imposes a tax of 0.5% on all corporate stock buybacks of issued shares. Such trades are included in the Financial Transaction tax, which similarly applies a rate of 0.5% on all stock trades.