Assemb. Phil Steck (Times-Union, 5/20/19) describes a tax on Wall Street transactions as “a fair way to make sure the economy works for everyone across the state.”
New York State Assemb. Phil Steck had an idea. A great many Democrats have agreed that the state needs more revenue, not just to avoid budget cuts but to augment services and fund education. New Yorkers already fund the state through income taxes and sales taxes; the legalization of marijuana adds another “sin tax.” Shouldn’t the state, he said, also take a tiny slice out of stock trades?
Funny story: The state does have a stock transfer tax, it’s just that since 1982, all of the revenue from those taxes is rebated back to investors. So 100% of an on-the-books tax goes to subsidizing the wealthy people who pay it, and the public receives nothing. Steck proposed repealing the rebate, a move that some lawmakers said would “raise an estimated $13–16 billion in annual revenue” for the state. The pro-business Citizens Budget Commission (11/9/20) came out against removing the rebate, although generally transaction taxes are popular among a wide range of economists and policy experts.
Steck’s bill got some discussion in the press (Albany Times-Union, 5/20/19; Spectrum News, 9/21/20; City and State, 12/21/20), but not enough to make a splash, even though it was a seemingly pragmatic policy response to the outcry against inequality raised by Occupy Wall Street, the Bernie Sanders presidential campaign and economists like Thomas Piketty. The editors of the New York Times clearly know about the public outrage about inequality—and affect concern about it.
The New York Times could have written about this fundamental outrage, that the state has billions of dollars that could pay for roads, schools and services from Troy to Buffalo but instead is handed back to wealthy financiers. Why not highlight such a crude imbalance by featuring a bill that’s trying to fix it?
In fact, at least one Times reporter, according to sources, has done reporting on the bill, speaking at length with Steck, and with consumer advocate and former presidential candidate Ralph Nader, about the stock transfer tax. But a decision was apparently made in the Times editorial chain of command that that bill wasn’t likely to move forward, and therefore it wasn’t worth writing about.
Some of the bill’s advocates aren’t buying this logic. After all, how many times has the Times, like any other major news outlet, covered a policy proposal that never came to fruition? Nader, speaking to FAIR, saw a clear double standard:
The presumed response of the Times that the bill didn’t have the chance to pass, if applied to all the reports about legislation, would have foreclosed hundreds of articles from their…archives from various legislatures around the country and the world…. Every day they’re writing about a Biden legislation that can’t get through Congress, for example. Often they write about two or three legislators introducing a bill that doesn’t have a chance of enactment on the first round, but has newsworthy substance.
Wall Street is extremely opposed to paying a stock transfer tax—the New York Stock Exchange even threatened to move out state if it was enacted (Reuters, 2/9/21)—and other finance advocates have blasted new taxes (Wall Street Journal, 2/23/21). And the Times has long been hostile to the stock transfer tax—the editorial board opposed its introduction more than a century ago, decrying it as Albany’s “appetite for New York City’s money” (New York Times, 3/14/05), although it later admitted the tax worked as intended (7/20/05). The paper then claimed it was pushing investors out of New York after the mid-’70s fiscal crisis (New York Times, 12/14/75), and the editorial board lambasted the idea of a stock transfer tax again under Mayor Ed Koch (New York Times, 4/23/83).
“Historians have cast doubt on the suggestion that the Exchange would pick up and move,” Gothamist (10/13/20) reports.
Relocating the exchanges, though, can be viewed as a bluff. Citing “tax experts,” Gothamist (10/13/20) pointed out, “The New York Stock Exchange is unlikely to pack up and leave, since it doesn’t pay the tax itself but passes it on to investors.” Hong Kong has a stock transfer tax, one that is more onerous than would be imposed on trades under Steck’s plan, and investors believe it works well (CNBC, 2/25/21; Dealbreaker, 2/25/21).
Steck even argued that like all small taxes, the stock transfer tax could be built into the cost of high-speed trading. “You just build the 5 cents [per trade] into your model,” he told FAIR. “It’s not a big deal.”
A stock transfer tax might even inspire less capital flight than a direct tax hike on millionaires, which is a part of this year’s New York state budget plan, advocates said. “We have argued that it would be far easier for millionaires to decamp than the stock exchanges,” James Henry, former chief economist at McKinsey & Co. and a fellow at Yale’s Global Justice Program, told FAIR. He noted that individuals can move their homes more easily than global financial institutions that have entrenched themselves in a particular location for a century.
Henry said that “a lot of the money that would be raised by the stock transfer tax” wouldn’t necessarily be paid by state residents, but “paid by New York businesses.” He told FAIR: “This can be thought of as a progressive sales tax. It’s a tax on the casino-like behavior of the stock market.”
Steck’s bill is a far more centrist measure against Wall Street than calls for more restrictive regulations on trading that usually outrage fiscal conservatives. Such a tax wouldn’t stop traders from getting rich or create more red tape; it would simply let the rest of the state share a little in the wealth.
For the bill’s advocates, the New York Times‘ choice not to cover it is a self-fulfilling prophecy. Saying it doesn’t have a chance of passing destroys the bill’s chances by marginalizing it in the public discussion. The paper—clearly the most powerful media outlet in New York state, if not the entire United States—deprived the proposal of the media oxygen it needed to become a more viable policy outcome, or at least a form of pressure on the state government to adopt other progressive tax measures.
It’s not like the Times (5/18/18, 2/26/18) has ignored the orgy of profiteering on stock trades. Other city publications (e.g., New York Daily News, 2/3/20) have highlighted previous efforts to take its slice of Wall Street trades. And the Steck bill could have been featured in a piece about the many ideas to tax Wall Street; state Sen. Julia Salazar and Assemb. Yuh-Line Niou proposed another such bill concerning stock trades (Daily News, 2/9/21).
“Wall Street was more afraid of the stock transfer tax” than other tax proposals in the state, Henry said, because financiers feared that if the idea took root in the nation’s center of capital, “it would be picked up in Washington and have a national version.” He added that not collecting the tax is a missed opportunity: “It would provide revenue,” and is a “great source for bondable funds…to finance all the heavy infrastructure investments [the state] has to make.”
“I don’t think the problem was with the reporter, it was with the editors,” Steck said, adding, “For some reason, this tax seems to raise the hackles of establishment Democrats.” Henry noted that the Times editors “aren’t the most aggressive when it comes to reporting on Wall Street.”
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This post was originally published on FAIR.