(The Center Square) – Business leaders say a proposed tax on financial transactions will likely “backfire” and urged lawmakers to reconsider the legislation.
The bill sponsored by Assemblyman John McKeon would impose a tax of one-hundredth of a penny – a decrease from the original proposal of one-quarter of a penny – for the next two years. The tax would raise an estimated $500 million annually for a total of $1 billion over the two year period.
“Although it will mean a lot to the taxpayers of New Jersey, it won’t mean a lot to investors or anybody else that’s a part of the market,” McKeon said.
That’s not exactly the case, said Hope Jarkowski of the New York Stock Exchange during a meeting of the Assembly Financial Institutions and Insurance Committee.
“In realty, and as acknowledged by the legislation itself, this tax would be imposed on a processor of transactions but would be passed along to a purchaser or seller,” Jarkowski said.
The data processing centers were originally located in New Jersey because of its proximity to New York. But modern technology can operate the processing centers anywhere in the country. The New York Stock Exchange and Nasdaq have already experimented with moving the data centers out of New Jersey, representatives of the exchanges said.
The tax is one more blow to the state’s business community which has already taken a hit with a tax increase on corporations that make more than $1 million and a tax on income over $1 million, business leaders said.
Now the state is “setting its sights” on the financial services industry with contributes nearly $1.4 billion in state and local taxes, said N.J. Chamber President and CEO Tom Bracken.
“Gov. Phil Murphy said the proposed tax on electronic transactions would be temporary and it would eventually phase out,” Bracken said. “That’s exactly what they told us about the Corporation Business Tax surcharge. It will phase out, they said. And what are they doing this year? They are extending it.”
The industry employees 38,000 New Jersey residents, according to Christopher Emigholz, vice president of government affairs for the New Jersey Business and Industry Association.
“These direct jobs don’t even include all of the indirect economic activity caused by this high earnings industry located in our state,” Emigholz said. “It also does not include the significant boost our innovation economy receives by having powerful data centers here. If we are talking about stronger and fairer, we should want more of this – not less.”
The committee did not vote on the bill.