Considering that New Jersey is a state governed by a former Goldman Sachs executive, it's perhaps not surprising that the financial services industry was ultimately successful in its quest to gut a proposed high-frequency trading tax. - which was supposed to finance a new "social justice" agenda.
But after the industry sharpened its knives, sending a letter to lawmakers warning that the tax would ultimately be passed on to consumers, effectively creating one more tax on retirees and other savers, while also ultimately lowering the total tax take for the state of New Jersey, it appears they have capitulated.
According to Bloomberg, NJ lawmakers have scaled back the proposed fee in a bid to overcome opposition from financial firms, which have threatened to leave the state, a tactic familiar to the super-wealthy (unless you're David Tepper). Though, to be sure, if NYSE and NASDAQ want to move their data processing centers out of NJ, they don't have too many better options nearby.
One of the key revision to the bill, which will be reviewed next week by Democratic leaders, is that the tax has been revised down from a quarter of a quarter of a cent to one-hundredth o the cent.
New Jersey lawmakers seeking to tax high-speed trading scaled back the proposed fee in a bid to overcome opposition from financial firms that have threatened to move operations out of state.
A revised draft of the bill obtained by Bloomberg would impose a temporary tax of a hundredth-cent per trade, down from an earlier bid to levy a quarter-cent tax. The fee would be paid by “high-quantity processors of financial securities,” meaning firms that collect and store data. And under the new plan, the tax would end after two years.
A legislative committee is set to discuss the proposal next week. Sponsors include Senate President Steve Sweeney, a Democrat who is New Jersey’s highest-ranking state lawmaker.
The New York Stock Exchange, Nasdaq Inc. and Cboe Global Markets Inc. have opposed the tax idea, threatening to close their New Jersey data centers and relocate an electronic infrastructure that underpins the world’s biggest and most active stock markets. Governor Phil Murphy sees the tax on stocks, options, futures and swaps trading as a way to help shore up the state’s fiscal health and expand his social-justice agenda.
The new tax plan would apply only to instruments subject to fees under the Securities Exchange Act of 1934. If the tax is already paid to another state, New Jersey would adjust or cancel the amount due.
Murphy saw the potential windfall as a shot to expand what he calls his "stronger, fairer" agenda to close New Jersey’s wealth gap, according to the administration officials, who spoke on condition of anonymity because the legislation is in early stages. Now, will NJ's capitulation inspire their allies across the Hudson to follow suit?