Rpld §280-a, amd §270, Tax L; rpld §92-i, amd §§92-b & 93-b, St Fin L; rpld §11-503 sub (c), §11-604 sub 12,
NYC Ad Cd; add §3-0323, En Con L
Repeals the rebates for stock transfer tax paid; dedicates funds of the stock transfer tax fund and stock transfer incentive fund to various funds; establishes the safe water and infrastructure action program.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4574A
SPONSOR: Steck TITLE OF BILL:
An act to amend the state finance law, in relation to the repeal of the
rebate for stock transfer tax paid and the funds of the stock transfer
tax fund and the dedicated infrastructure investment fund; to amend the
environmental conservation law, in relation to establishing the safe
water infrastructure action program for the purpose of making payments
toward the replacement and rehabilitation of existing local municipal-
ly-owned and funded drinking water, storm water and sanitary sewer
systems; to amend the tax law, in relation to taxes imposed in certain
transactions; to repeal section 280-a of the tax law relating to the
rebate for stock transfer tax paid; to repeal section 92-i of the state
finance law relating to the stock transfer incentive fund; and to repeal
certain provisions of the administrative code of the city of New York
relating thereto
PURPOSE OR GENERAL IDEA OF BILL:
To repeal the electronic rebate of the stock transfer tax, collect 100%
of this tax and dedicate the funds to the state general fund commencing
with the fiscal year and ending March 31, 2026, after which 100% of the
funds collected will be deposited into the following:
The Metropolitan Transportation Authority (MTA), the New York State
Education Department (NYSED) to support Foundation Aid, the maint enance
and repair of state and bridges (NYSDOT), the New Your City Housing
Authority (NYCHA), the infrastructure, maintenance and dev elopment of
passenger rail lines for AMTRAK in the northeast corridor, the Consol-
idated Local Street and Highway Improvement Program (CHIPS), the munici-
pal aid and incentives program (AIM), the safe water and infrastructure
action program, the downstate and upstate transits systems, the Clean
Energy Fund, the Department of Health, and the Department of Agriculture
and Environmental Conservation and Parks for the proposes of reforesta-
tion and soil conservation.
SUMMARY OF PROVISIONS:
Section 1. To repeal the electronic rebate of the stock transfer tax,
collect 100% of this tax and dedicate the funds to the state ge neral
fund commencing with the fiscal year and ending March 31, 2023, after
which 100% of the funds collected will be deposited into the following:
i) ten percent shall be directed to the metropolitan transportation
authority financial assistance fund established pursuant to section
ninety-two-ff of this article, of which fifty percent shall be used for
the purpose of operations and fifty percent shall be used for the
purpose of capital projects;
(ii) ten percent shall be directed to the division of housing and commu-
nity renewal for the purpose of capital projects and other improvements
to address issues relating to conditions of governance and habitability,
including but not limited to, heating, mold, or lead, and other such
conditions affecting the health and safety of tenants at housing devel-
opments owned or operated by the New York city housing authority;
(iii) five percent shall be directed to the highway and bridge capital
account in the dedicated highway and bridge trust fund establi shed
pursuant to section eighty-nine-b of this article;
(iv) five percent shall be directed to the dedicated highway and bridge
trust fund established pursuant to section eighty-nine-b of this arti-
cle, to be directed towards the infrastructure, maintenance and develop-
ment of rail lines for AMTRAK in the northeast corridor;
(v) five percent shall be directed to the local infrastructure account
of the general fund established pursuant to section seventy-two of this
article to be directed to the Consolidated Local Street and Highway
Improvement Program (CHIPS);
(vi) five percent shall be directed to the local infrastructure account
of the general fund to be dedicated to the safe water and infrastructure
action program as established by section 3-0323 of the environmental
conservation law;
(vii) five percent shall be directed to the municipal assistance state
aid fund established pursuant to section ninety-two-e of this article;
(viii) five percent shall be directed to the dedicated mass transporta-
tion trust fund to the credit of the non-MTA account for payment to
downstate transit systems other than those transit systems operated by
the metropolitan transportation authority;
(ix) five percent shall be directed to the dedicated mass transportation
trust fund to the credit of the non-MTA account for payment to upstate
transit systems;
(x) ten percent shall be directed to the energy research development
operating fund pursuant to the provisions of section eighteen hundred
fifty-nine of the public authorities law, to be directed to the clean
energy fund and shall be divided equally among the four investment port-
folios that make up such fund;
(xi) two and one-half percent shall be directed to the city university
of New York, of which fifty percent shall be used for the purp ose of
capital improvements and infrastructure projects and fifty percent shall
be used for the purpose of supporting academic programs at city of New
York institutions;
(xii) two and one-half percent shall be directed to the state university
of New York institutions, of which fifty percent shall be used for the
purposes of supporting and expanding services and care at state univer-
sity of New York hospitals, state university of New York academic
medical centers and fifty percent shall be used for the purpose of
supporting academic programs at state university of New York insti-
tutions;
(xiii) ten percent shall be directed to the department of education for
the purpose of supporting foundation aid;
(xiv) ten percent shall be directed to the department of health to
support health care; and
(xv) ten percent shall be directed to the department of agriculture,
department of environmental conservation, and office of parks, r ecrea-
tion and historic preservation for the purposes of reforestation, soil
conservation, sustainable agriculture, local parks and open space,
Section 8: Establishes the Safe Water and Infrastructure Action Program;
a stream of funding to local governments state-wide for the repair,
maintenance and capital improvement of drinking water, storm water and
sewer systems
Section 9: Provides for the stock transfer tax to be collected should
any activity in furtherance of the transaction occur in the State of New
York or if any party involved in the transaction satisfies a nexus with
New York State which shall be defined as broadly as it is permitted
under the United States constitution.
Section 10: Effective Date.
JUSTIFICATION:
From 1905 to 1981, New York State imposed a tax on the sale of securi-
ties. 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.
To transform New York, we must commit to raising revenue. Conservative-
ly, the stock transfer tax will raise approximately $13 billion annually
(based upon a 10-year average of collections). There is no other revenue
stream, with the exception of the raising the state income tax, that
will immediately raise this level of revenue.
For years New York State has not committed to raising the revenue neces-
sary to fund such basic programs as Education, CHIPS and AIM to a level
that can actually achieve results. Our passenger rail system is multiple
decades behind those of Europe, and our public tra nsportation system in
the city of New York is being supported by fees and taxes on low- and
middle-income individuals.
The stock transfer tax is a revenue generator that operates as an indi-
rect tax, rather than a direct tax, such as property or income. Stocks
are also predominantly owned by the wealthiest of Americans. The top
10% of American households, as defined by total wealth, now own 84% of
all stocks in 2016, according to a recent paper by NYU economist Edward
N. Wolff. Furthermore, while virtually all (94 %) of the very rich
reported having significant stock holdings-as defined as $10,000 or more
in shares-only 27% of the middle class did. (The study framed that
middle class as the group between the poorest 20% and the richest 20% of
Americans.)1
The stock transfer tax is infinitesimal, as the schedule from the New
York State Department of Taxation and Finance shows below:
Sale or agreement to sell at less than1 1/4 C $5 per share
Sale at $5 or more but less than $102 1/2 per share
Sale at $10 or more but less than $203 % C per share
Sale at $20 or more per share 5 C
Transfers of stock or certificates of2 1/2 C interest other than by sale
While the tax itself is infinitesimal, the volume of trading is what
drives this revenue stream to at least $13 billion. During financial
crises, trading volume increases (thus increasing the stock transfer tax
revenue), while income and property tax revenues decrea se. This revenue
will offset decreased state income tax collections and local property
tax collections and has the potential to stabi lize our state budget
when our direct tax revenues are falling, which, according to Comp-
troller DiNapoli, is happening now. Due to recent global events, New
York State finds itself in a fiscal crisis that must be addressed, and
makes this legislation is all the more necessary.
Additional benefits of this legislation would be the economic boom
created by this revenue stream in employment, construction, and ot her
ancillary businesses. With significant investment in education, health-
care, infrastructure, and the lie, property values increase benefiting
local governments.
