Pay Your Share

Out-of-Towners, Stock Speculators, Unions Must Ante Up in Fiscal Crisis

In the realm of contributing a fair share, Robins, along with other analysts such as populist historian Mike Wallace and the labor-backed Fiscal Policy Institute, have suggested that the city re-impose a lesser version of another long-forgotten levy, the stock transfer tax. Beginning in 1907, New York City collected up to a nickel every time a share of stock changed hands. The tax was dropped in 1981 amid worries that increasingly transient markets might take their business elsewhere. Had it remained in place, however, that tax alone would have generated a mind-boggling $8 billion a year during the boom markets of the 1990s, according to J.W. Mason, an economist who analyzed the tax in the October issue of City Limits magazine.

Robins and others have suggested that the tax (which technically remains on the books for legal reasons) be reinstituted at one-tenth the old rate, enough to generate some $800 million a year. There is little reason to fear a renewed tax will cause the markets to flee, as Mason points out in his article. The cities with the fastest growing stock exchanges, including Singapore, Hong Kong, and London, all collect levies on stock sales, with London exacting a whopping .5 percent.

True shared sacrifice might also mean that large corporations maintain their contribution to the city. Using his bully pulpit, businessman mayor Bloomberg could urge a renewed municipal patriotism upon his corporate colleagues. Such New York loyalty should include a freeze on subsidies and abatements to major businesses. Bloomberg is in a good posture to do so, since he renounced subsidies awarded his own firm, Bloomberg LP, after his election last year. Similarly, Bloomberg should warn the business community that making money in New York only to move those profits offshore or out of state, a trend noted last month by the city's Independent Budget Office, is also anti-New York.

Mayor Michael Bloomberg: There are sizable loopholes in his mantra of shared sacrifice.
photo: Elizabeth Lippman
Mayor Michael Bloomberg: There are sizable loopholes in his mantra of shared sacrifice.

So, too, such shared sacrifice should extend to municipal unions. On the same day that Bloomberg's aides released details of the planned budget measures, they also announced a new labor agreement with the firefighters union that included no significant work rule changes that might have saved the city substantial funds. The same lapse also extended to the recent police union contract. Late last month the teachers union, which won its best wage contract in years from the Bloomberg administration this summer, paid the city back by securing a court ruling that pension benefits should extend to extracurricular activities and summer school classes. According to the city's comptroller, the increase will add $70 million a year to the city's pension costs. Similarly, the union retained its rights for paid, yearlong sabbaticals for veteran teachers, a unique program that costs another $70 million for taxpayers.

Bloomberg has the language right. Now it's a question of putting it into practice.

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