NEWARK, NJ – New Jersey Governor Phil Murphy and state Democrats are proposing a financial tax on a person or entity that processes 10,000 or more financial transactions through electronic infrastructure located in the state during the calendar year. Both the New York Stock Exchange and NASDAQ operate their data centers in New Jersey and both have threatened to leave before the tax takes effect. This week, it has been confirmed that NASDAQ is already in talks with Texas to relocate some of its operations there.
A financial transaction tax could send crippling shockwaves throughout New Jersey as data centers, brokerage firms, and investment firms could be forced to move their operations west and with those businesses, the financial sector workers would surely follow. While Murphy sees the tax as a way to fix his financial crisis on the backs of the investment industry, that short term fix could lead to long term disaster for the state.
“This bill imposes a tax on persons or entities that process 10,000 or more financial transactions through electronic infrastructure located in New Jersey during the year. The tax is $0.0025 (a quarter of a cent) per financial transaction processed in New Jersey,” the bill states. “There are reportedly billions of financial transactions processed daily, and many of those are processed through electronic infrastructure located in New Jersey. This tax, which is on the processor but may be passed along to the purchaser or seller, can therefore potentially raise a significant amount of revenue for New Jersey. For purposes of the tax, a financial transaction is a transaction involving the purchase or sale of a financial security. Security includes, but is not limited to, a futures contract, options contract, futures option contract, swap contract, credit default swap contract, derivative, or share of stock in an entity.”
Texas Governor Greg Abbott who made a pitch to attract New Jersey residents in 2018 is once again making a pitch, this time, for New Jersey financial businesses.
“I’ve been talking with the Nasdaq stock exchange about moving some of their operations to Texas. They want to flee high taxes. I let them know that we just passed a constitutional amendment banning an income tax in Texas,” Abbot said.
Photo by Meriç Dağlı on Unsplash