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To help close the deficit, tax stock sales, say some lawmakers 

Dec 13, 2019

Credit New York Now

The state is facing a $6 billion budget deficit, mainly due to an increase in spending on Medicaid, and Gov. Andrew Cuomo and state lawmakers are trying to come up with ideas on how to close it.

One idea gaining support among some Democrats in the State Legislature is reinstating a decades-old stock transfer tax changed during the Reagan era that its sponsor said could net the state billions of dollars a year.

Assemblyman Phil Steck said his bill to reinstate a one-quarter of 1 percent tax on transfers of stocks and bonds in the financial markets is nothing new.

"It's a sales tax," Steck said. "It was actually brought in by the Republican Party in 1905 because Republicans don't like income taxes, they prefer sales taxes."

It was changed during President Ronald Reagan's time in office in the 1980s.

"There was artificial exuberance about all the wonderful things Wall Street was going to do for us," said Steck.

He credited New York's financial industry for revitalizing New York City, but he said "the benefits for the rest of the state have not been there."

"This would spread it out," said Steck.

In New York law, the tax is technically still on the books, but it has been rebated back to brokers. Steck said he believes that reviving the tax could bring in $13 billion a year. He said that money could be used to upgrade infrastructure -- fixing roads and bridges upstate, and the subways and commuter trains downstate.

While the bulk of the tax would fall on major millionaire and billionaire players in the stock market, Steck said an average middle-class New Yorker with a self-directed retirement account would likely pay an average of $50 more per year.

Steck said the tax could also cut down on what is known as "churning," where money is moved around in the financial industry with no increase in economic productivity.

Steck is a Democrat from the Capitol Region and a supporter of Vermont Sen. Bernie Sanders, who's also a presidential candidate. Steck was one of the few Democratic elected officials in New York to be a Sanders delegate in 2016, and he hopes to be one again in 2020.

Sanders proposed reinstating a federal version of the stock transfer tax in 2016, and supports it again as part of his second run for the presidency.

Business groups are against the proposal, saying it will harm Wall Street and the economy.

Steck is circulating the bill and has gained the support of two longtime prominent Assembly members, Dick Gottfried, who chairs the Health Committee, and Joe Lentol, chair of the Codes Committee. In the state Senate, Sen. James Sanders, chair of the Committee on Banks, is a supporter.