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Senate President Steve Sweeney, left, Assembly Speaker Craig Coughlin, center, and Gov. Phil Murphy

Despite continued threats, top Democrats still eyeing financial transaction tax

Murphy suggests microcent tax could be temporary measure

By Nikita Biryukov, October 13 2020 3:29 pm

Gov. Phil Murphy and Democratic legislative leaders aren’t backing off a proposal that would levy a quarter-of-a-cent tax on financial transactions despite major exchanges threatening to pull out of the state over the measure.

“They’ve got their concerns, naturally, but I think this is something worthy of consideration, and we’ve spent a lot of time working on it, as have our legislative colleagues,” Murphy said Tuesday. “It’s tricky. We didn’t score it in the budget because it was tricky, and again the spirit that we’ve tried to express is this is not forever and for always. This is an hour of need where we have to come together, and if we do that, we’ll get through this together.”

Digital infrastructure in North Jersey processes many of the trades made in New York Markets, and New Jersey’s top Democrats have expressed varying levels of support for the microcent tax, despite relocation threats from the New York Stock Exchange and NASDAQ.

Politico New Jersey on Tuesday reported the Assembly is set to hold a hearing on the proposal, sponsored by Assemblyman John McKeon (D-West Oragne), Monday.

The move signals firmer support for the microcent tax than has previously been seen from Assembly Speaker Craig Coughlin, and Senate President Steve Sweeney on Saturday indicated similarly staunch support for the measure.

“It is time for #WallStreet to share in the sacrifices that the residents of New Jersey have made this past year,” he said on Twitter. “By issuing a tax on the #microtransactions produced by daily trading, we can pass more financial savings to individuals and raise millions in new state revenue.”

The growing approval from legislative leaders follows a concerted effort, made by the exchanges and other business organizations, to head off the tax.

Since early October, the Exchanges, the New Jersey and U.S. Chambers of Commerce, the New Jersey Business and Industry Association and host of other financial groups have sought to lobby Sweeney, Coughlin and the state’s congressional delegation against the microcent tax with letters warning of a coming industry flight.

The NYSE has explored a move to Chicago, while NASDAQ is in talks to relocate to Texas. Still, there’s been little clarity about the number of jobs such moves would actually cost New Jersey.

Further, it’s not clear how the increased distance between New York markets and datacenters in the Midwest and Southern United States would affect time-sensitive high-frequency trades the microcent tax targets.

Financial transaction taxes imposed in other countries have led to industry flight and declines in trading volume, but those were most often imposed on a national level and frequently imposed a tax based on trade value, not on transaction frequency.

Murphy has heeded industry warnings, but they’ve not been enough to make the proposal a non-starter.

“I continue to be intrigued by it,” he said Tuesday. “I continue to like it, and we’re continuing to take it seriously.”

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