Reduces rebate of the stock transfer tax to 80% and provides for appropriation of the balance of such tax: 25% to the city of New York and 75% to the state

BILL NUMBER:S3892A

Title of bill

An act to amend the tax law and the state finance law, in relation to the stock transfer tax

Purpose or general idea of bill

The purpose of this bill is to reduce the rebate of the stock transfer tax to 80% and provides for appropriation of the balance of such tax 25% to the city of New York and 75% to the state.

Summary of provisions

Section 1 amends subdivision 1 of section 280-a of the tax law, as amended by chapter 578 of the laws of 1981, by adding that on or before September 30, 2012, 80% of the tax incurred and paid shall be allowed as a rebate on the stock transfer tax paid.

Section 2 amends subdivision 3 and 4 of section 92-b of the state finance law, subdivision 3 as amended by chapter 878 of the laws of 1977 and subdivision 4 as amended by chapter 724 of the laws of 1979, to appropriate 25% of the balance of the stock transfer tax to the city of New York and 75% of the balance of the stock transfer tax to the state

Section 3 provides for this act to take effect September 1, 2012.

Justification

New York faces a devastating budget deficit this year with a shortfall estimated at nearly $10 billion and growing. As a result, NYS will make dramatic cuts to schools, health care, energy and environmental programs and a drastic reduction in the state workforce. While spending cuts are necessary to address the severe budget shortfall and shared sacrifices are called for from all sectors of our communities, it is incumbent upon the legislature to look for ways to increase revenue in a responsible and legitimate way as well. Shared sacrifice must come in the form of not only budget cuts but revenue generating prospects as well.

A responsible approach to looking at potential revenue sources should necessarily involve reviewing current revenue sources that may not be utilized as efficiently as possible. One such existing source of revenue is the "Stock Transfer Tax" that imposes a small fee on the sale or transfer of stocks, bonds and other financial assets. The New York State "Stock Transfer Tax" has been in existence since 1915, and was used as a revenue source by the State for many years until it was slowly reduced by virtue of rebates. Since 1981 the tax has been rebated at a rate of 100%, therefore every year $16 billion in stock transfer taxes (at a nickel a share) is collected by the state and immediately returned to Wall Street. Rolling back a small proportion of the Stock Transfer Tax rebate on financial transactions to an 80%, as opposed to 100%, rebate will help to significantly

address the deficit by raising a substantial amount of revenue. It will also continue to provide a substantial rebate of this tax to investors and is a fair and reasonable shared sacrifice.

Prior legislative history

None.

Fiscal implications for state and local governments

None.

Effective date

This act shall take effect September 1, 2012.