February 23, 2021

SIFMA Highlights Negative Consequences of Proposed Reimposition of New York State Stock Transfer Tax

Steven Lofchie Commentary by Steven Lofchie

In a new whitepaper, SIFMA detailed the potential negative implications of legislation that would reimpose a New York State Stock Transfer Tax ("STT").

As previously covered, the New York STT was at one time imposed on the sale or transfer of a stock within New York State at a rate ranging from 1¼ to 5 cents per share. Collection of the STT was effectively eliminated in 1981 through a 100% rebate of any tax imposed.

Proposed New York State Bills S1406A, S270, A3353A and A3271 would either fully or partially restore the tax. In the whitepaper, SIFMA emphasized that:

  • the New York financial services industry (defined as securities and banking) generated, directly or indirectly, an estimated $21.5 billion in state and local taxes in 2019, or $58,000 per direct employee;

  • the cost of the SST would be passed to investors and would impact individual savings in 401(k) or 529 plans;

  • the imposition of the SSTs would likely result in a decline in trading activity, as evidenced by material declines of 16% and 30% in trading activity observed in France and Sweden, respectively, after imposing an STT; and

  • the imposition of an SST would likely result in a shift of trade executions outside of New York to avoid the tax.


It is a flawed strategy to impose a tax on an activity that is extremely mobile when other jurisdictions do not impose a similar tax. (Note previous comment.) New York would be hurt by the reimposition of a stock transfer tax. Further, the execution of trades is not that hard to move out of New York. Back in 1981, the New York Stock Exchange ("NYSE") was basically the only meaningful trading venue for major stocks, and the location of the NYSE trading floor was readily locatable. Now, there are numerous competing trading venues, not all in New York, and while the NYSE has a New York City business address, at the end of the day, the heart of the NYSE is technology systems, not a trading floor.

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