Asked and Answered–David Cay Johnston & The Stock Transfer Tax

David Cay Johnston
Just this morning, I asked a question in a live on-line Q & A with David Cay Johnston. The session is being hosted by, the Post Standard, “the-whatever-the-hell-you-call-the-local-newspaper” these days. Mr. Johnston was a reporter for the NY Times, where he covered tax issues. He is the author of an in-depth look at how the tax system exacerbated inequalities in our society in the fascinating book “Perfectly Legal.” Mr. Johnston is currently a visiting instructor at Syracuse University.

According to the twitter feed of the Post Standard reporter Michelle Breidenbach–the photo at the top of this post shows Mr. Johnston answering my question.

My question:
One tax the state collects and immediately rebates is the stock transfer tax. A little over 1 penny for each transfer. The potential revenues for this would seem to be very large. Why does the state walk away from such potential revenue–at a time when i’s desperately needed?

David Cay Johnston response:
A so-called Tobin tax may drive the markets out of NYC and to another place. London has tried to replace NYC as the world financial capital and China is working hard at doing so by 2050 or so.
The real problem is rules that let these speculators defer taxes for decades, an issue explained in Perfectly Legal, my 2003 book.

I was a bit disappointed that a well-known progressive didn’t seem up for supporting the stock transfer tax, an article of faith for those on the left attempting to find a means to a more equitably funded government. Perhaps if the tax were a national tax, such as the one proposed by Rep. Keith Ellison of Minnesota and the Congressional Progressive caucus, the urge of financial institutions to flee NYC would be moot?

Anyway–time to go back and re-read “Perfectly Legal”


I received a brief e-mail response from Mr. Johnston on my follow up question I alluded to in this blog post:

“National tax could work. State tax would just invite moving servers to NJ.”

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