Fix the MTA & NYCHA by Ending Wall Street Tax Rebates

New York is a wealthy city – the financial capital of the world. But it’s becoming harder and harder to live here. For too long, our transportation and housing infrastructure have been starved of the investments they need. Every day, millions of New Yorkers battle with delayed trains, slow buses, and congested roads coughing out pollution into our air. Half a million of us shiver through winter in NYCHA housing that’s prone to broken heating. Our city loses $20 billion every year every year in lost time and productivity caused by traffic congestion.

It doesn’t have to be like this. There’s a simple solution to making New York a more liveable city, which would raise $11 billion every year: ending rebates of the Stock Transfer Tax and using the money saved to invest in New York’s crumbling transportation and housing infrastructure.

As Public Advocate, Rafael Espinal will call on the State to stop rebating New York’s existing Stock Transfer Tax, and invest that money into the MTA and NYCHA.

In less than a decade, the revenue would cover the $60 billion the MTA needs and the $32 billion NYCHA needs. After that, it could be used to improve the public transportation in areas like Eastern Queens and to better connect Brooklyn, Queens, and the Bronx. This would provide at least 10 times more investment than congestion charges or revenue from marijuana legalization. And marijuana revenue should be used for economic development opportunities and criminal justice reform in the communities who have been historically disadvantaged by unfair drug law enforcement. Revenue from a congestion charge, if one is created, could be spent on reducing bus and train fares or speeding up the transition to clean electric buses.

How will it work?

New York has had a Stock Transfer Tax on the books since 1906, with revenue split between New York City and the State. In the 1960s, all the revenue went to the City. But since 1981, 100% of the revenue collected has been rebated back to the stock traders. For the last 10 years, this has averaged $11.5 billion annually. Instead of rebating the tax, it should be invested in an Infrastructure Trust. Within a few years, our subway system would once again be the essential infrastructure that underpins New York’s economic success, reduces the city’s traffic congestion, and lowers dangerous carbon emissions. NYCHA would become a model for how to do public housing well, instead of a moral failure like it is now. And New York would be a more livable city. What’s more, infrastructure investment would create thousands of jobs putting New Yorkers to work fixing up the subway system and NYCHA housing.

New York will remain the financial capital of the world

New York is the financial capital of the world and will stay that way. The IMF has stated that this kind of tax would “not automatically drive out financial activity to an unacceptable extent.” Other global financial centers already have similar taxes: in London it’s 0.5% and in Singapore it’s 0.2%. New York’s tax rates range from 1.25 cents per share to 5 cents per share, depending on the value of stock traded, and the tax is capped at $350 per trade. A stock trade worth $10 million only pays $350 in tax.

Financial markets should work for the people, not the other way around

Ending rebates of the New York Stock Transfer Tax would primarily affect speculators who treat Wall Street like a casino, not long-term investors like pension funds, people with 401(k) plans, and mom and dad investors. Many investors will find that the tax is less than their brokerage and management fees.

Stock Transfer Taxes reduce the incentives for high-speed trading practices and the strategy of investing for only short terms and then flipping stocks for the fastest profit. They don’t discourage investing, only gambling without any economic value. Stock Transfer Taxes are progressive. The Tax Policy Center estimates that 75% of this kind of tax would be paid for by the wealthiest fifth of taxpayers and 40% of it would be paid by the top one percent.