It’s no secret the MTA is in trouble; however, when it comes to mass transit, forcing people to pay more for less service is a bad idea. The agency is losing money as a result of a massive hit from Covid-19. Proposed federal stimulus funding is unlikely to come anytime soon and it looks like congestion pricing, the previous answer to the MTA’s budget woes, is not going to happen anytime soon either. So, how are we going to save straphangers from enduring the brunt of this burden? How are we going to prevent layoffs of frontline transit workers, many of whom fell sick with Covid-19 and even lost colleagues to the illness?
Fortunately, there is an answer that raises the revenue we need and doesn’t punish the hardworking people of New York. It is time to end the rebate of the stock transfer tax.
I have proposed legislation (S.6203-A/A.7791-B) to do just that. This one tax alone has the ability to plug Albany’s budget hole and allow for long-term capital planning. This tax is not punitive; it is applied equally to qualifying stock transactions, and it is estimated to bring in $13 to $16 billion annually. Best of all, investors are already paying it and the state is already collecting it. So, instead of sending rebates to wealthy Wall Streeters and professional stockbrokers, the state should keep the fee and then allocate the money immediately.
Right now, the MTA is threatening fare hikes and deep cuts to service. Nine thousand dedicated transit employees are facing potential job loss, a slap in the face after they served our city during the pandemic. “We fully know that any increase will hurt New Yorkers, especially those in areas that depend on us most,” MTA Chairman Pat Foye said at a recent public hearing.
Under my legislation, New York State will end the rebate and keep 100 percent of this tax. The money will go into the State General Fund for the first two years, providing immediate relief to the deep fiscal crisis. After that, 100 percent of the funds collected will be divided amongst various agencies with a significant percentage going to the MTA. The important thing to remember is that the stock transfer tax is not just a short-term fix but also a long-term solution for the MTA’s financial problems.
This revenue will offset decreased state income and local property tax collections and has the potential to stabilize our state budget when our direct tax revenues are falling, which, according to Comptroller Tom DiNapoli, is happening now. In his annual report on the MTA’s finances, DiNapoli said the agency “is facing the greatest crisis in its long history” and “long-lasting damage that could impair regional transit for decades.” The MTA’s congestion pricing program, which was supposed to raise revenue (although it did not account for COVID-19) “could be delayed until 2023,” officials wrote in the agency’s Nov. 24 quarterly disclosure to bondholders.
I know we hear the word “tax” and assume that it is a bad thing, but in this case, that little word, which represents fractions of a cent on every stock transfer, is the cement that will fill in the gaping hole that threatens to swallow New York, and take many good people with it. We cannot afford to balance the budget on the backs of those already suffering. It is time to take equitable, long-term approaches that ensure our fiscal recovery. It is time to end the rebate of the stock transfer tax.
James Sanders Jr. is New York State Senator for the 10th District, in Southeast Queens and Rockaway and Chairman of the Senate Banking Committee.