AB5215 Summary:

BILL NOA05215
 
SAME ASSAME AS S03980
 
SPONSORNiou
 
COSPNSRForrest, Davila, Mitaynes, Gottfried, Simon, Mamdani, Anderson, Carroll, Thiele, Reyes, Gallagher, Kelles, Meeks, Gonzalez-Rojas, Rosenthal L, Clark, Walker, Jackson, Seawright, Burke, Richardson, Pichardo, Kim, Frontus, Barron, Zinerman, Burgos
 
MLTSPNSR
 
Add Art 15 §§340 - 346, Tax L
 
Relates to the imposition of tax on certain financial transactions.
Go to top    

AB5215 Actions:

BILL NOA05215
 
02/12/2021referred to ways and means
01/05/2022referred to ways and means
Go to top

AB5215 Committee Votes:

Go to top

AB5215 Floor Votes:

There are no votes for this bill in this legislative session.
Go to top

AB5215 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5215
 
SPONSOR: Niou
  TITLE OF BILL: An act to amend the tax law, in relation to the imposition of tax on certain financial transactions   PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to raise additional tax revenues by taxing the trading activities of financial services firms including investment banks and hedge funds. .The tax applies at low rates to transfers of stocks, bonds, and derivatives.   SUMMARY OF PROVISIONS: Section 1 amends tax law by adding a new article 15 titled, "Tax on Financial Transactions", containing the following sections: -Section 340 is comprised of definitions for terms including "specified base amount", "covered transaction", "security", "derivative financial instrument", "specified index", "treatment of exchanges", "qualified board or exchange", and "broker". -Section 341 is titled "Imposition of Tax" and imposes a tax on each covered transaction with respect to any security. The applicable percentage of the specified base amount involves the trade of stocks, bonds, and other financial instruments. Transfers of stock and other equities are taxed at 0.5% of the trading value; transfers of bonds and other debt instruments are taxed at 0.1% of trading value; transfers of derivatives are taxed at 0.005% of the premium in the case of an option (or similar instrument), any payment in the case of a forward contract (or similar contract), and any payment in the case of a notional princi- pal contract (or similar instrument). -Section 342 is titled "Exceptions" and describes exceptions for certain traded short-term indebtedness by way of a note, bond, debenture or other like evidence. Initial issuances and lending agreements with a maturity period of less than 60 days are exempt from the tax. -Section 343 is titled "Liability for tax" and describes the directives of responsibility for facilities in New York State and special rules for direct transactions in regard to payors and payees. -Section 344 is titled "Administration and regulation" and describes the role of the commissioner in providing guidance and prescribing regu- lations as necessary. -Section 345 is titled "Interest and civil penalties" and describes the penalty of 20 percent of the amount of tax in addition to an interest penalty which increases with each month of non-payment. - Section 346 describes Criminal penalties. Section 2 is a severability provision. Section 3 is the effective date.   JUSTIFICATION: New York is an exceptionally wealthy state. Treated as a separate coun- try, it would have one of the world's largest economies. With such a strong economy, all New Yorkers should have fundamental economic rights: access to high-quality education, affordable healthcare, guaranteed housing, and basic social services and social insurance. New York must also finance investments in green energy, green jobs, and green infras- tructure in order to mitigate the catastrophic risks of climate change. Unfortunately, New York is also the most unequal state in the nation. In part this is because our tax system has not kept pace with changes in the economy, leaving the many high-earning professionals and wealthy families in this state undertaxed. Economic growth from recent decades has overwhelmingly benefitted a small segment of elites, while infla- tion-adjusted wages have stagnated for the vast majority of working people since the 1970s. The state government, lacking adequate tax revenues, has been unable to afford essential public investment and social spending, including upgrading our infrastructure, repairing public housing, protecting public education, and financing Medicaid. The financial services industry is one of the largest sectors of New York's economy. While the financial industry contributes substantially to the economic dynamism of this state, it is also largely responsible for growing economic inequality and the rising cost of living. Wall Street bankers get richer every year, and their gains do not trickle down. Corporate raiders and private equity firms engage in predatory investing, laying off workers for the sake of short term profits. The financial sector has also been responsible for routine crises resulting from speculative and irrational behavior, with the most notorious exam- ple being the global financial crisis. These crises require massive government intervention to prevent economic collapse, but those who caused the crisis never pay the price. The government bails out the banks, leaving taxpayers holding the bag. Countries have imposed taxes on stock trading for centuries, recognizing that financial markets only exist because of government permission and regulation. The United States itself imposed a tax on stock transfers between 1914 and 1965, and New York had its own Stock Transfer Tax that was imposed from 1905 through 1981. The United Kingdom has imposed a tax on stock transfers since the 17th century, and this tax has not prevented London from becoming a global financial center to rival New York City. Opponents of financial transaction taxes often object that they will push the industry to move to a low tax state. The argument is fundamen- tally confused about what makes it possible for a financial center to exist. Wall Street cannot leave New York. Without urban infrastructure, a highly educated workforce, sound government regulation, and a sophis- ticated commercial environment, the financial sector cannot exist. This bill establishes a modernized, comprehensive tax on financial tran- sactions of stocks and other equities, bonds and other debt instruments, and derivatives. The tax exempts initial issuances of securities and short-term lending. Social Justice Impact: By way of creating additional revenue for public services in New York State, this legislation would fund and enforce New Yorkers' rights to high-quality public education, affordable healthcare, guaranteed housing, and basic social services and social insurance. In addition, this bill would create a more progressive tax structure for New York State.   LEGISLATIVE HISTORY: This is a new bill.   FISCAL IMPLICATIONS: This tax will raise between $12 billion and $29 billion annually in new revenue.   EFFECTIVE DATE: This bill is effective immediately upon passage.
Go to top

AB5215 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5215
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 12, 2021
                                       ___________
 
        Introduced  by  M. of A. NIOU -- read once and referred to the Committee
          on Ways and Means
 
        AN ACT to amend the tax law, in relation to the  imposition  of  tax  on
          certain financial transactions
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. The tax law is amended by adding a new article 15  to  read
     2  as follows:
     3                                 ARTICLE 15
     4                        TAX ON FINANCIAL TRANSACTIONS
     5  Section 340. Definitions.
     6          341. Imposition of tax.
     7          342. Exceptions.
     8          343. Liability for tax.
     9          344. Administration and regulation.
    10          345. Interest and civil penalties.
    11          346. Criminal penalties.
    12    §  340.  Definitions.  1.  Specified base amount. For purposes of this
    13  article, the term "specified base amount" means:
    14    (a) except as provided in paragraph (b) of this subdivision, the  fair
    15  market  value  of the security (determined as of the time of the covered
    16  transaction); and
    17    (b) in the case of any payment described in subparagraph  four,  five,
    18  or six of paragraph (a) of subdivision three of this section, the amount
    19  of such payment.
    20    2.  Covered  transaction.  For  purposes  of  this  section,  the term
    21  "covered transaction" means:
    22    (a) except as provided in  paragraph  (b)  of  this  subdivision,  any
    23  purchase if:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08795-01-1

        A. 5215                             2
 
     1    (1)  such  purchase  occurs  or  is  cleared  on  a qualified board or
     2  exchange located in the state, or is executed by a broker in the  state;
     3  or
     4    (2)  the  purchaser or seller is a New York state resident or business
     5  with a taxable presence in the state; and
     6    (b) any transaction with respect to a security described  in  subpara-
     7  graph  four,  five, or six of paragraph (a) of subdivision three of this
     8  section, if:
     9    (1) such security is  traded  or  cleared  on  a  qualified  board  or
    10  exchange  located in the state, or is executed by a broker in the state;
    11  or
    12    (2) any party with rights under such security  is  a  New  York  state
    13  resident or business with a taxable presence in the state.
    14    3. Security and other definitions. For purposes of this section:
    15    (a) The term "security" means:
    16    (1) any share of stock in a corporation;
    17    (2)  any partnership or beneficial ownership interest in a partnership
    18  or trust;
    19    (3) any note, bond, debenture,  or  other  evidence  of  indebtedness,
    20  other  than a state or local bond the interest of which is excluded from
    21  gross income under section 103(a) of the internal revenue code;
    22    (4) any evidence of an interest in, or a derivative financial  instru-
    23  ment  with  respect to, any security or securities described in subpara-
    24  graph one, two, or three of this paragraph;
    25    (5) any derivative financial instrument with respect to  any  currency
    26  or commodity including notional principal contracts; and
    27    (6) any other derivative financial instrument any payment with respect
    28  to which is calculated by reference to any specified index.
    29    (b)  The  term  "derivative financial instrument" includes any option,
    30  forward contract, futures contract, notional principal contract, or  any
    31  similar financial instrument.
    32    (c)  The  term "specified index" means any one or more of any combina-
    33  tion of:
    34    (1) a fixed rate, price, or amount; or
    35    (2) a variable rate, price, or amount, which is based on  any  current
    36  objectively  determinable information which is not within the control of
    37  any of the parties to the contract or instrument and is  not  unique  to
    38  any of the parties' circumstances.
    39    (d)  (1)  An  exchange  shall  be  treated as the sale of the property
    40  transferred and a purchase of the property received by each party to the
    41  exchange.
    42    (2) In the case of a distribution treated as  an  exchange  for  stock
    43  under  section  302 or 331 of the internal revenue code, the corporation
    44  making such distribution shall be treated as having purchased such stock
    45  for purposes of this section.
    46    (e) The term "qualified board or exchange" has the meaning given  such
    47  term by section 1256(g)(7) of the internal revenue code.
    48    (f)  The  term  "broker"  has  the  meaning given such term by section
    49  6045(c)(1) of the internal revenue code.
    50    § 341. Imposition of tax. 1. There is hereby imposed  a  tax  on  each
    51  covered transaction with respect to any security.
    52    2.  The tax imposed under subdivision one of this section with respect
    53  to any covered transaction shall be the  applicable  percentage  of  the
    54  specified base amount with respect to such covered transaction.
    55    The applicable percentage shall be:

        A. 5215                             3
 
     1    (a)  one-half  of  one  percent in the case of a security described in
     2  subparagraph one or two of paragraph (a) of subdivision three of section
     3  three hundred forty of this article;
     4    (b)  one-tenth  of  one percent in the case of a security described in
     5  paragraph (a) of subdivision three of section  three  hundred  forty  of
     6  this article; and
     7    (c)  five  thousandths  of  one  percent  in  the  case  of a security
     8  described in subparagraph four, five, or six of paragraph (a) of  subdi-
     9  vision three of section three hundred forty of this article.
    10    3.  Except as otherwise provided by the commissioner, any payment with
    11  respect to a security described in subparagraph four, five,  or  six  of
    12  paragraph  (a)  of  subdivision  three of section three hundred forty of
    13  this article shall be treated as a separate transaction for purposes  of
    14  this section, including:
    15    (a)  any net initial payment, net final or terminating payment, or net
    16  periodical payment with respect to a  notional  principal  contract  (or
    17  similar financial instrument);
    18    (b)  any  payment  with  respect  to  any forward contract (or similar
    19  financial instrument); and
    20    (c) any premium paid with respect to any option (or similar  financial
    21  instrument).
    22    §  342.  Exceptions.  1. No tax shall be imposed under this article on
    23  any covered transaction with respect to  the  initial  issuance  of  any
    24  security  described  in subparagraph one, two, or three of paragraph (a)
    25  of subdivision three of section three hundred forty of this article.
    26    2. A note, bond, debenture, or other evidence of indebtedness which:
    27    (a) is traded on a trading facility located in the United States; and
    28    (b) has a fixed maturity of not more than sixty  days,  shall  not  be
    29  treated  as described in subparagraph three of paragraph (a) of subdivi-
    30  sion three of section three hundred forty of this article.
    31    (c) No tax shall be imposed under this article on any  covered  trans-
    32  action with respect to which gain or loss is not recognized by reason of
    33  section 1058 of the internal revenue code.
    34    §  343. Liability for tax. 1. The tax imposed by this article shall be
    35  paid by:
    36    (a) in the case of a transaction which  occurs  or  is  cleared  on  a
    37  facility located in the state, such facility; and
    38    (b)  in  the case of a purchase not described in paragraph (a) of this
    39  subdivision which is executed by a broker in the state, the broker.
    40    2. In the case of any transaction to which  subdivision  one  of  this
    41  section  does  not  apply, the tax imposed by this article shall be paid
    42  by:
    43    (a) in the case of a transaction described in paragraph (a) of  subdi-
    44  vision two of section three hundred forty of this article:
    45    (1)  the  purchaser  if  the purchaser is a New York state resident or
    46  business with a taxable presence in New York; or
    47    (2) the seller if the purchaser is not a New York  state  resident  or
    48  business with a taxable presence in New York; and
    49    (b)  in the case of a transaction described in paragraph (b) of subdi-
    50  vision two of section three hundred forty of this article:
    51    (1) the payor if the payor is a New York state  resident  or  business
    52  with a taxable presence in New York; or
    53    (2)  the  payee if the payor is not a New York state resident or busi-
    54  ness with a taxable presence in New York.
    55    § 344. Administration and regulation. 1. The party liable for the  tax
    56  imposed  pursuant  to  this article shall file a return, in the form and

        A. 5215                             4
 
     1  manner and containing such information, as shall be  prescribed  by  the
     2  commissioner.
     3    2. The commissioner shall:
     4    (a)  provide  guidance  regarding such information reporting and other
     5  relevant matters concerning covered  transactions  as  the  commissioner
     6  deems appropriate; and
     7    (b)  prescribe  such  regulations  as  are necessary or appropriate to
     8  prevent avoidance of the purposes of this article  and  otherwise  carry
     9  out its purposes.
    10    §  345.  Interest  and  civil  penalties. Any person failing to file a
    11  return or to pay any tax within the time required by this article  shall
    12  be  subject to a penalty of twenty percent of the amount of tax due plus
    13  an interest penalty of two percent of such  amount  for  each  month  of
    14  delay  or fraction thereof after the expiration of the first month after
    15  such return was required to be filed or such tax became due, such inter-
    16  est penalty shall not exceed twenty-five per centum in the aggregate. If
    17  the commissioner determines that  such  failure  or  delay  was  due  to
    18  reasonable  cause  and  not due to willful neglect, the commissioner may
    19  remit, abate or waive all of such penalty and such interest penalty.
    20    § 346. Criminal penalties. The criminal penalties in sections eighteen
    21  hundred one, eighteen hundred  two,  eighteen  hundred  three,  eighteen
    22  hundred  four,  eighteen  hundred  five,  eighteen hundred six, eighteen
    23  hundred seven and eighteen hundred seventeen of this chapter shall apply
    24  to this article with the same force and effect as  if  the  language  of
    25  those  provisions  had  been set forth in full in this article except to
    26  the extent that any provision is either inconsistent with a provision of
    27  this article or is not relevant to the taxes imposed by this article.
    28    § 2. Severability clause. If any clause, sentence, paragraph, subdivi-
    29  sion, section or part of this act shall be  adjudged  by  any  court  of
    30  competent  jurisdiction  to  be invalid, such judgment shall not affect,
    31  impair, or invalidate the remainder thereof, but shall  be  confined  in
    32  its  operation  to the clause, sentence, paragraph, subdivision, section
    33  or part thereof directly involved in the controversy in which such judg-
    34  ment shall have been rendered. It is hereby declared to be the intent of
    35  the legislature that this act would  have  been  enacted  even  if  such
    36  invalid provisions had not been included herein.
    37    § 3. This act shall take effect immediately.
Go to top