An old friend told me that her family used to ignore the change that would slip out of pockets beneath the couch cushions so that during the final desperate week of every month when finances were tightest, “lost” change was recovered and went toward beer. A creative savings plan if you ask me.
In an excellent report about New York budget cuts protests recently, I came across something I’d never read about before. Wouldn’t you know it, but New York state does almost exactly the same thing that my friend’s family used to do, only on a scale that even the most devoted cargo pants wearer could never have imagined.
New York state’s couch-cushion fund, a.k.a., the stock transfer tax, has a curious history and you won’t believe what the governor does with it today.
Like virtually every other state, New York is in the red. According to the New York Times, even moderately paid office workers have been spotted buying loose cigarettes, “loosies,” from illegal street vendors in Midtown because taxes have driven up the cost of a pack to $12.50. In addition to these anti-working class “sin taxes,” Governor Andrew Cuomo has pushed through massive cuts to education and social services.
During the Civil War and the Spanish-American War of the late 19th century, the federal government levied a tax on all stock transactions to help pay for those wars. In 1905, New York state initiated its own stock transfer tax, despite threats from brokerages and financiers to move their operations to New Jersey. [I’ve got no beef with Hackensack or Secaucus, but the snobs paying lunatic limo fees to sit in midday traffic jams while the rest of us zip under the city via subway don’t even travel to Brooklyn, fuhgettabout relocating to Jersey!]
Anyway, aside from the fact that Wall Street never budged and instead built ever-taller monuments to its greed, the stock transfer tax continued to be collected. Today, every share that’s traded is taxed at about 5 cents each, up to a maximum of $350 per transaction. This may sound like small change, but as any couch-cushion beer aficionado will tell you, it all adds up. For several years, the tax has amounted to about $16 billion per year—that’s a 6-pack of vegan-approved PBR for everyone on the planet every month for life! OK, not really, but you get my point.
Since New York state is running a $10 billion budget deficit, we’re pretty much in that last desperate week of the month, rechecking pants pockets in the laundry and scrounging under cushions for change. That $16 billion could really come in handy about now. Well, not exactly.
It turns out that ever since 1979, the state began to rebate stock transfer taxes and return the money to the very banks and financial outfits responsible for this crisis in the first place. Huh?
Governor Andrew Cuomo could have opted last week to eliminate the rebate altogether. That way, New York state would not only be able to save all social services, but we’d actually have a surplus with which to create a massive jobs program and possibly even raise the salaries of public sector workers in a state with the greatest income inequality in the nation.
In addition to that fund, according to the Green Party candidate who ran against Cuomo, Howie Hawkins, if New York returned to the tax rates it had when the rebate was created, 95% of state residents would get a tax cut, yet tax revenue would increase by $8 billion a year. In other words, there are cash reserves that could be tapped rather than face the horrific potential of slashing 15,000 jobs out of a state workforce of 190,000.
Last year alone, 25 hedge fund managers made nearly $1 billion each. It would take more than 441,00 workers making $50,000 a year—about the pay of many public sector workers here—to earn that kind of dough. And that’s not all. Because of the rich-fuckers-don’t-pay-taxes loophole (sometimes known as “carried-interest” loophole), hedge fund managers’ earnings aren’t considered income, but capital gains, and therefore they’re taxed at only 15%. Make a billion bucks, keep $850 million. It’s obscene!
As the budget slashing continues across the nation, it’s becoming more apparent that the big difference between Republicans like Scott Walker in Wisconsin who slashed taxes on the rich to create a budget deficit of about $130 million and Democrats like Cuomo is that when it comes to class warfare, compared to the Democrats in New York and California, the Republicans are really small-time thieves.