Mar 31

Mar 31 Majority of New Yorkers want to collect a century-old phantom tax that will generate billions in new revenue By John Zogby

For over 100 years, New York State law has provided for a stock transfer tax that essentially collects a tax on all stock transactions. For many years, after heavy lobbying by stock traders, tax money was actually collected – then immediately rebated to the firms that sold the stocks. In other words, it has been for most of its existence a phantom tax.

Since 1982, the charade of collecting first then rebating the revenue was halted, but the stock transfer tax is still on the books as state law. So, what are we talking about in real dollars and cents? The tax translates into a 5-cent tax per share every time a stock is sold, thus in 2020, with the average trade on the NASDAQ NDAQ +0.2% at about eight thousand four hundred dollars, the total tax would have been around $8.80 a trade, or .1 percent. - a minuscule sum anyway you look at it. Since 1982, however, New York has kept the tax on the books, but it has rebated more than $350 billion to Wall Street investors.

Most New Yorkers are not even aware of this issue. John Zogby Strategies was commissioned by a coalition of public interest groups, unions, and Albany legislative leaders to test support or opposition of breathing new life into this phantom tax. Our poll of 704 likely voters statewide found that overall, 53% agreed it should be collected while only 34% disagreed. After arguments both in support and opposition were read to voters, agreement rose to 59% while opposition declined to 30% — a 29-point differential.

The Steck-Sanders bill right now before the New York State Legislature calls for stopping this rebate and collecting the stock transfer tax according state law and presently has 55 sponsors in the New York Assembly and 13 in the Senate. It is estimated that the stock transfer tax could generate at least $12-$20 billion in state revenue each year. Sponsors hope to pass it and make it a model in the European Union and worldwide.

When asked if the stock transfer tax can provide billions for investment in jobs, notably for infrastructure and green energy, 63% are more likely to support the collection while only 18% are less likely. Fifty-six percent are more likely to approve of its collection if the new revenue is used to close the budget deficit, while 24% are less likely. Another majority (56%) are more likely to support if the additional revenue is used to close the deficit, and 55% say they are more likely to support it because stock traders have done well and should do their fair share in balancing the budget.

Interestingly, one of the major arguments against enforcing the tax collection is also the least persuasive argument in obtaining more support: only 33% are more likely to favor the stock transfer tax if they realize that some stock trading firms would consider leaving New York State, while 39% are less likely to support it. Among those who initially disagreed with collecting the tax, 53% were less likely to support it after hearing the threat that stock trading firms would consider leaving New York.

When the pollsters tested which arguments were most likely to move those in the "disagree" column to the "agree" column once they heard the argument, the most persuasive argument was additional billions for investment – 58% of those who initially “somewhat disagreed” with the tax moved into the support column.

Initial support for the stock transfer tax came from Democrats (63%) and independents (49%), while 44% of Republicans were in favor. After hearing all the arguments pro and con, support on balance increased among all groups: Democrats (70%), independents (58%), and Republicans (45%). Except for suburban Republicans, a majority of all races, voters under 50 years of age, both Upstate and New York City residents, and even those working in the financial services industry (77 percent) all supported collecting the tax.

Significantly, the argument that was most likely to move those who initially opposed reinstatement of the tax to support was the additional revenue generated for new infrastructure and green energy. (58% more likely to support it).

“There are two certainties in life, death and taxes”, Benjamin Franklin famously said. The stock transfer tax is one that most New Yorkers want to bring back to life.

John Zogby (@TheJohnZogby) is the founder of the Zogby Poll and Zogby companies, including John Zogby Strategies, and author of We Are Many We Are One: Neo-Tribes and Tribal Analytics in the 21st Century America.