New Jersey Seeks to Tax its Way to Prosperity
Article from For Liberty by Norm Leahy.
New Jersey is about to discover whether a proposed tax intended to raise billions of dollars will prompt the businesses in question to pull up stakes and move elsewhere.
According to the Wall Street Journal, New Jersey’s proposal would impose a “tax of $0.0025 on every transaction [the exchanges] handle, including trades of stocks, options, futures, and derivatives.”
The intended targets are the major stock exchanges, which process billions of share transactions every day. Rather than try to fight the new tax in court, or lobbying the legislature, the major exchanges may do something far more modern – and even more radical: shift their electronic processing operations out of New Jersey entirely. There is precedent for such a response:
About a decade ago, the CME Group, which houses both the Chicago Mercantile Exchange and the Chicago Board of Trade, secured concessions from Illinois that largely exempted them from tax increases when the company made clear that—name and history notwithstanding—it was not strictly tied to Chicago. Here, the process is far easier. The exchanges would not have to leave Wall Street; they would simply have the electronic processing take place somewhere other than their current location in New Jersey.
The New York Stock Exchange is going to run a test Sept. 26 to see whether such a move is feasible.
New Jersey Gov. Phil Murphy, who supports the transaction tax, has warned legislators not to count on the money as they craft spending plans. Murphy’s backup plan relies on other tax hikes and on borrowing money:
[Murphy wants to raise] income taxes on millionaires and making an expiring surtax on corporations permanent to help fill the state’s revenue shortfall. He’s also called for borrowing $4 billion to balance the budget.
Image Credit: By Jericho [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons