The continued uncertainty over the adequacy of the city’s revenues—along with New York State’s own huge deficit—have fueled calls for reinstating the state stock transfer tax, which was phased out beginning in 1978. One recent proposal would restore the tax at half its original rate. Absent any adverse reactions to the tax itself (that is, under what is known as a ‘static forecast’), the city would stand to collect nearly $5 billion per year from the proposed transfer tax. How much revenue actually would be realized depends on the sensitivity of stock market activity to changes in trading costs, the sensitivity of the city economy to changes in stock market activity, and the sensitivity of other tax collections to changes in the city economy. In this paper, we model the economic and fiscal effects of the proposed tax under a best-case scenario in which the pace of stock trading activity is affected by a stock transfer tax, but the location of trading activity is not—that is, neither the stock exchanges, their member firms, nor investors shift their activities out of New York City. Our main findings are
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