SIFMA Paper Outlines Negative Impact of Stock Transfer Tax on New York Economy

New York, NY, February 23, 2021 – SIFMA today issued a whitepaper titled “Economic Contribution of the New York Financial Services Sector and Review of the Stock Transfer Tax.”  The analysis outlines the significance of the financial services sector to the city and state of New York and suggests that the stock transfer tax (STT) could have a negative impact on both the city and the state economy.

“A stock transfer tax is nothing more than a sales tax on investors,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO.  “While some may assert this is a tax on the securities industry, in fact it is a tax on every New Yorker who invests and saves for retirement through mutual funds, 401ks or IRAs.  It is also a tax on employee pension funds, foundations and endowments.  In addition, our research indicates such a tax could result in the diminution of NY based financial activity to the detriment of the state. The shrinkage of an industry that is the largest contributor to New York’s economy and tax base, combined with the negative impact on New York’s savers, make the STT a terrible policy move for the state.”

Highlights of the paper include:

The New York financial services industry supports nearly one million total jobs in the state.  Combined, the industry employs 369,300 jobs in New York state and 279,400 in New York City. These direct jobs support an additional 596,900 jobs in other sectors, for a total of 966,200 jobs supported by the sector in the state.

The industry’s employment multiplier is 2.62 which means for every financial services industry job in New York, an additional 1.62 jobs are supported elsewhere in the economy. 596,900 indirect and induced jobs are supported by the financial services industry in New York, of which 341,300 are within New York City. Of these New York City jobs, 22% are indirect and induced jobs coming from the health, social services and education sectors.

Considering direct, indirect, and induced effects, the industry supports approximately $364.6 billion of total GDP in New York State and $274.5 billion for New York City. The direct contributions to GDP, which represent payments to labor and capital, are an estimated $247.4 billion and $207.5 billion respectively. For New York, every $100 dollars of GDP contributed by the industry generates an additional $47 of GDP elsewhere in the economy.

New York state and local taxes generated by the financial services sector totaled an estimated $21.5 billion in 2019. On a per-employee basis, the total direct, indirect, and induced state and local tax contribution of the financial services sector in New York exceeded $58,000 per direct employee in 2019.

The financial services sector in New York City occupies a large share of leased space in Lower Manhattan as well as supports over a quarter of all business-related hotel nights in New York City, two of the sectors hardest hit by COVID-19 impacts. In Lower Manhattan, the financial services sector occupies 45% (10.6 million sq. ft.) of commercial property leased by the top 30 largest private-sector tenants. An estimated 2 million hotel nights booked in 2019 were associated with the financial services sector.

Financial firms would likely pass the cost of an STT on to investors which would include mutual funds, pension funds and charitable funds. Other investors subject to the tax would include individuals saving for college or retirement. Equities accounted for nearly a quarter of private pension assets and 38% of US household liquid assets in 2018.

The proposed tax would significantly increase in the all-in cost per trade for trades in New York. The average cost of a trade is 0.1 cents. Based on data from CBOE, the average share value traded on New York-listed stock exchanges in January 2021 was approximately $42 and, therefore, would be subject to a five-cent tax per trade, meaning the tax-inclusive cost of a New York trade would rise significantly.

Academic and institutional research has shown a contraction in the size of financial services markets due to STTs.  When STTs or other financial transaction taxes have been imposed, observed declines in trading activity occurred ranging from 16% in France to 30% in Sweden. It is possible transactions which would otherwise have been executed in New York could shift to other states to avoid the tax which would lead to a reduction in the New York financial services industry.

The STT may cause trading activity to shift outside of New York to avoid the tax. It is possible transactions which would otherwise have been executed in New York could shift to other states to avoid the tax which would lead to a reduction in the New York financial services industry, therefore not raising revenue but moving economic activity out of the city.


SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit