As the feud grows between New Jersey, which houses both the main facility of the inappropriately named New York Stock Exchange and the Nasdaq and which sparked an uproar last month by
proposing a tax on high frequency trading whose proceeds would be used to replenish the state's empty coffers and funa a "
social justice agenda", and exchanges and various HFT firms which have
threatened to promptly flee the state if such a trading tax does in fact pass, Height Capital Markets analyst Edwin Groshans wrote that a proposed tax on financial transactions under consideration by New Jersey Governor Phil Murphy might "encourage other states facing budget shortfalls, like N.Y., to pursue a similar strategy."
"It also increases the risk that the federal government will act on implementing a financial transaction tax," and will be an "issue to watch at the federal level" if Joe Biden wins in November and the Democrats gain Senate control, according to Groshans.
For his part, the analyst gave the tax a surprisingly high 65% chance of passing as part of N.J.’s budget process, though he noted Murphy has said the law is likely to be challenged in the courts.
As reported
previously, a bill sponsored by Democratic Assemblyman John McKeon calls for a quarter-of-a-cent tax on stocks, options, futures and swaps trading via northern New Jersey electronic data centers. McKeon said the state could collect $10 billion annually from entities engaged in at least 10,000 transactions per year, which is about how many transactions HFTs make every second. If enacted, N.J. would be the first state in more than 40 years to tax trading activities.
