Murphy said such tax revenue couldn’t be counted on for the coming fiscal year because litigation almost certainly would hold up collections. But if the proposal withstood legal challenges, the administration officials said, it could fund such programs as “baby bonds” -- $1,000 investment accounts for infants from lower-income families, to be used for education or to buy a home or start a business.
McKeon, the Assembly sponsor from West Orange, described the quarter-of-a-cent rate as flexible -- “a good placeholder, and now conversations take place.” He cast doubt on the ability of data centers to easily move from the Manhattan area, as trading speed can decay over distance.
“It’s not like they can flip a switch, and that’s one motivating factor to get them to work with us,” McKeon said. Within five years, he said, he expected that trades will be done wirelessly, a disincentive to build expensive new centers elsewhere.
The major exchange operators previously have gone to court over proposals that they said would harm markets. NYSE, Nasdaq Inc. and Cboe Global Markets even took the extreme step of suing their main regulator, the U.S. Securities and Exchange Commission, over a transaction-fee pilot program last year. They won.
“A financial transaction tax is a recycled idea with a lousy track record -- all over the world,” said the Equity Markets Association, a trade group that represents the three companies.
The move by New Jersey would “cause unintended and irreparable harm to the U.S. capital markets,” Cboe said in a separate statement. “A transaction tax is a direct cost shouldered by investors, who will also end up paying for the price of diminished liquidity and wider spreads in our markets.”
This article was provided by Bloomberg News.