More Tax Revenue, Please

In one form or another the idea has been floating around the liberal ecosphere for years now. Since the notably inefficient Democratic-led governments in places like New York City and New York State are on the verge of bankruptcy, where oh where will they find additional tax revenue? Why not tax stock trading or commodities trading or any other kind of financial transaction that takes place within the confines of lower Manhattan. 

And now, the notably incompetent governor of New Jersey, Phil Murphy, the man whose state suffered about as many per capita covidvirus fatalities as New York, has decided, given his own state’s parlous financial condition, to tax what is called high frequency trading. The kind that takes place in facilities that the New York Stock Exchange has built in New Jersey.

It must have seemed like a great idea to the tax hungry folk who mismanage the New Jersey state government. They could tax all of the high frequency trades taking place in its jurisdiction.

But then the New York Stock Exchange counterpunched by explaining that it did not really need New Jersey. It could easily move its high frequency tradition operations elsewhere. And in fact it was going to show how it would be done.

So much for taxaholics, 

Zero Hedge has the story:

A week after New Jersey Governor Phil Murphy signaled his virtue to the 'social justice' agenda-watchers by proposing a tax on high frequency trading, no lesser establishment organization than The New York Stock Exchange has passive-aggressively signaled its displeasure by saying in a statement that it will test its ability to operate outside of New Jersey.

The major exchange operators previously have gone to court over proposals that they said would harm markets. NYSE, Nasdaq Inc. and Cboe Global Markets even took the extreme step of suing their main regulator, the U.S. Securities and Exchange Commission, over a transaction-fee pilot program last year. They won.

"A financial transaction tax is a recycled idea with a lousy track record -- all over the world," said the Equity Markets Association, a trade group that represents the three companies.

The move by New Jersey would “cause unintended and irreparable harm to the U.S. capital markets,” Cboe said in a separate statement. "A transaction tax is a direct cost shouldered by investors, who will also end up paying for the price of diminished liquidity and wider spreads in our markets."

Hmmm--

And as we noted previously, the NYSE has already threatened to depart the moment a tax was enacted:

"We have data centers in various states and the ability to move trading outside of New Jersey in a business day," said Hope Jarkowski, co-head of government affairs for New York Stock Exchange parent Intercontinental Exchange.

And today, the exchange, in coordination with Nasdaq, Cboe Global Markets, and other industry participants, ramped up the rhetoric, saying that it will conduct a test of all its exchanges operating from their secondary locations on Sept. 26 to “confirm the industry’s ability to seamlessly move live trading out of New Jersey,” according to a statement.

But then, what happens if other states institute the same tax?

Of course, the big question, as we previously noted, what happens when all the states in which NYSE have data centers follow NJ in establishing a paywall for ultra fast trades which do nothing to make the market more efficient unless one counts surging flash crashes "efficiency"?

One should not become overly hysterical about the prospect. States compete with other states, so one suspects that more than a few will be happy to welcome the business of those who have been chased out of New York City.

If not, there are always Dubai and Singapore.