![]() The effective rate on the sale of a Berkshire Hathaway Class A share ($288,257 at market close on July 22) would be 0.0000009 percent, while the rate on the sale of a share in Sirius FM ($5.94 at close) would be over 48,500 times higher at 0.04 percent. Because the tax is imposed per transaction, the effective rate would be much higher on stocks that trade at lower prices-largely, though not invariably, associated with small and midcap stocks. This distorts investment decisions in that it slightly favors contracts with higher values. The bill proposes a flat-rate transaction tax, while most countries with FTTs levy a percentage-based tax. This rate may seem small, but it would quickly pyramid as the same instrument is traded-and therefore taxed-multiple times. The tax would be imposed per instrument, not per trade, meaning that a purchase of 1,000 shares would generate $2.50 in taxes. The quarter-cent tax would be imposed on each transaction that is processed in New Jersey, with a transaction defined as any purchase or sale of a security-including a share of stock, a futures contract, a derivative, or any similarly traded financial instrument or contract. There is no federal-level FTT in the U.S., though fees are imposed to fund the regulatory activities of the Securities and Exchange Commission (SEC). If either state succeeded, it would represent the only financial transaction tax (FTT) in the United States, although New York had its own FTT from 1905 to 1981. In New York, some lawmakers have proposed a rate as high as 5 cents per share (1.25 cents for stocks worth less than $5). New Jersey’s A4402 would impose a 0.25 cent tax on every financial transaction processed in the state. Seeking new sources of funding, New York and New Jersey-two states at the heart of global financial markets-are considering financial transaction taxes. regional member of the Global Financial Markets Association (GFMA). SIFMA, with offices in New York and Washington, D.C., is the U.S. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. ![]() We believe the proposal is far more likely to harm New Jersey investors and its overall economy than to achieve its revenue forecasts.” Moreover, the sector contributes nearly $1.4 billion in New Jersey state and local taxes. Not only does the sector employ more than 38,000 workers in New Jersey, its indirect and induced contributions support an additional 55,000 New Jersey workers. As such, the imposition of an FTT will likely lead to financial exchanges and firms moving their electronic infrastructure and the related jobs outside of New Jersey, creating a negative fiscal and economic impact across the state. Faced with an FTT, these firms are likely to gravitate towards alternate trading platforms in other states to offer a better price for their clients. “With specific regard to the New Jersey S2902/A4402 proposal, SIFMA would note that securities firms must adhere to FINRA’s ‘best execution’ rule which requires broker-dealers to find the most favorable price for customers when buying and selling securities. Moreover, in jurisdictions where an FTT has been implemented, it has never raised the expected revenue, yet it has resulted in a migration of trading volume to other jurisdictions which have not imposed an FTT, which is a predictable result in today’s predominantly electronic and globally connected markets. An FTT is nothing more than a sales tax on investors and it runs counter to many longstanding policies promoting savings and economic growth. “SIFMA strongly opposes the imposition of a financial transaction tax (FTT) due to the cost to retirement savers, investors, businesses and the economy. on the New Jersey S2902/A4402 proposal, in conjunction with SIFMA testimony given today at the hearing before the New Jersey Assembly Committee on Financial Institutions and Insurance: Washington, D.C., Octo– SIFMA today issued the following statement from SIFMA president and CEO Kenneth E.
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