The PSC and other advocates rallied at the New York Stock Exchange pushing a modest tax that could fund state services.
While corporate America assured the public that the Republican Party’s new tax cuts would mean more jobs and more public investment, the actual result has been quite different. In this year alone, publicly traded firms announced $157.6 billion in buybacks of their own stocks, while worker bonuses since the tax bill’s enactment are a mere $2.5 billion. Nearly 43 percent of the extra cash corporations have saved from the tax bill are going to buybacks, according to research by several economic think tanks.
ROBBING THE STATE
Are these transactions taxed? Yes and no. The state of New York taxes stock transfers, collecting $14 billion each year. However, since 1981, 100 percent of that money is rebated back to the brokers. In the end, the state doesn’t see a dime.
But the PSC and other progressive groups are trying to change this situation by demanding a stock buyback transfer tax, which would subject these buybacks to a 0.5 percent tax, to bring billions of dollars into the state, which could be used for affordable housing, health care and public education.
“We are only asking them to pay a fraction of a fraction,” said Assembly Member Yuh-Line Niou during a rally outside the New York Stock Exchange on March 9, adding that a buyback tax would be akin to how “we pay taxes on everything…like toothpaste or shoes.”
In addition to the PSC, the rally in the Financial District included VOCAL-NY, New York Communities for Change and the Communications Workers of America. The rally was part of a kickoff effort for other events promoting the tax. Activists, including the Patriotic Millionaires and the New York State Council of Churches, planned to pitch the tax proposal to Albany lawmakers and hold demonstrations in Albany over the next several weeks.
Governor Andrew Cuomo has said that he is interested in mitigating the negative impact the Trump administration’s tax reductions will have on the state, activists said at the rally. The demonstration in March introduced the idea of this tax as an easy way to help the state budget.
“The richest shareholders get much richer and working people get nothing,” said PSC President Barbara Bowen. “New York State deserves a share of this huge windfall to close the budget deficit and return some of the taxpayer’s hard-earned money to ordinary New Yorkers.”
As Matt Phillips pointed out in The New York Times, the practice of mass stock buy-backs, as it exists now, appears to deepen economic inequality. “Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock,” Phillips wrote in February. “A company purchasing its own shares is a time-tested way to bolster its stock price.”
RICH GET RICHER
Phillips continued, “But the purchases can come at the expense of investments in things like hiring, research and development and building new plants – the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stock purchases flow disproportionately to the richest Americans.”
Advocates estimate that the tax on buyback transactions could bring in $2 billion in revenue for the state. Demonstrators called for the tax as both the city and state were going through the annual budget- planning process.
“While Wall Street has seen record highs, New York State has seen record highs in poverty,” said Charles Kahn, the organizing director of the Strong Economy for All Coalition. “Let’s demand that Wall Street play by the same rules everyone else plays by.”