Rep. Josh Gottheimer Comes Out in Opposition of Proposed New Jersey Financial Transaction Tax

Rep. Josh Gottheimer spoke out against a proposed online financial tax that New Jersey legislators are considering to help close a growing budget gap.

If enacted, Gottheimer believes the tax would force data processing centers out of the state, hundreds of jobs and cause a multi-million loss in local tax revenue.

According to the proposal, the tax would apply to entities that process 10,000 or more transactions through electronic data processing centers located in New Jersey, like the New York Stock Exchange (NYSE) and NASDAQ.

The tax, which calls for a $0.0001 cent tax per transaction, would expire after two years and would raise $1 billion during that period, Assemblyman John McKeon (D-27), the bill’s sponsor said.

Industry Will Flee NJ

Should the tax move forward, the NYSE, which operates a data center in Mahwah, has threatened to leave the state, Gottheimer said during an Oct. 20 press conference outside of the facility.

“As soon as the state imposes this new tax, the back-end of the stock exchange here in Mahwah and all the banks that have a presence here will move, in unison, to a new location out-of-state,” he said.

“The bottom line is we cannot place this sort of tax on our financial transactions, because the firms that have processing centers in North Jersey and all throughout out state—where these transactions actually take place digitally, like here at the New York Stock Exchange data center—will pack up ASAP, head out of state, and cut all the jobs here, including those of hardworking men and women of labor. They have already proven that they can and that they will,” he said.

Jobs, Revenue At Stake

Improvements in technology and connectivity in recent years has meant that financial firms no longer need to be in close proximity to Manhattan and can place data centers almost anywhere.

In late September, NYSE tested a transition out of New Jersey, moving their transactions to a secondary data center in Chicago showing that they could just as easily operate there should the tax move forward.

 Two other exchange operators—Nasdaq Inc. and Cboe Global Markets Inc.—indicated that they would leave New Jersey over the tax. 

Statewide, the financial securities sector employs more than 38,000 workers and contributes $1.22 to New Jersey’s economy for every dollar spent on services.

Tax Would Be New ‘Burden’

In the midst of a pandemic that has cost thousands of jobs in New Jersey, Gottheimer said the proposed tax “is not the right solution.” He went on to call it “foolish” and said the tax “would have awful ripple effects.”

According to Gottheimer, several other Bergen County legislators aren’t on board with the proposal. State Sens. Paul Sarlo (D-36) and Joe Lagana (D-38) both have expressed reservations about the bill, said the congressman.

“When our state is already hurting — our taxpayers, residents, and retirees are about to get completely whacked, all while jobs are already being driven out of our state,” he said. “If the tax does go into effect and the financial firms have to immediately take on that new burden, what we’re going to see is that tax passed down to our residents as a cost of doing business, making every day saving more costly for families, local investors, everyone trying to save nickel and dime for their retirement, and those already living off their pension.”

Opposition Prompts Bill Amendments

McKeon initially pitched a $0.0025 tax with no sunset provision but amended the bill after receiving backlash New Jersey’s business community, as well as Republican lawmakers.

Gov. Phil Murphy has been supportive of the proposal—even after hearing concerns raised by financial institutions in the Garden State.

“The facts (are) we are in an hour of need. This is not a forever and always consideration,” said Murphy. “I think our side of the argument is reasonable, I’ve found them to be reasonable, and we shall see. This is something we still are studying and we still like what we see, but it’s complicated, there’s no question about it.”

3 comments

  1. They might be threatening to leave, but all these data centers CAME to NJ because they want to be as close as possible to NYSE and Wall Street, because the high volume houses deal with NANOSECOND delay concerns in the electronic data transmissions. The expense of abandoning their facilities in NJ and completely rebuilding them somewhere else to avoid a TWO YEAR tiny tax does not seem practical. By the time they got a new facility built, equipped and tested and operations moved over to the new location, the tax would have sunsetted.

  2. When Rep, Gottheimer was running to assume the seat of Leonard Lance several years ago, I mistakenly presumed that Mr Gottheimer was the Democratic candidate. I even donated money to help his successful campaign. Little did I (we?) know that there were actually two Republicans running in that election! He should really have run in the G.O.P. primary against Mr. Lance, and let an actual Democrat be selected to represent the Blue ticket. I believe that his stand against the “micro-tax” on financial market transactions conspicuously marks him out as a true protector of the monied classes’ interests. While he wrings his hands in dismay over the prospect of the wealthy investor paying a monstrous one ten-thousandth-of a-cent-per transaction, he holds us hostage to the bogus idea that financial services companies will flee our state, like yuppies abandoning pandemic Brooklyn to the greener, less-diseased pastures of, say Succasunna or Short Hills… Seriously, folks; these companies would pull up stakes and leave for any flimsy reason, at any time that suits them. The fact that the state they now call their current hobo jungle is desperately short of revenues to pay for essential services means less-than-nothing to them.
    Personally, the idea of me paying such a measly little tax when I buy or sell stock myself doesn’t phase me in the least;
    it’s too vanishingly small to matter to me as an individual who occasionally trades. It’s not going to effect my financial future, and I have a strong hunch that Mr, Gottheimer realizes that this is true not only for me, but for all of the other widows and orphans out there who are also occasional stock traders. The main burden (if this word really applies) of this tax falls on those who can best tolerate it: those who make millions, or billions of dollars, day in and day out, by making staggering numbers of financial transactions, and for each one of those, they would have to pay one ten-thousandth-of-a-cent. Anyone who would speak out against such a fair, truly progressive tax can only be focused on the interests of one small, well-seen-after group of individuals. That caring person could most probably be one of New Jersey’s most prominent closet Republicans.
    Perhaps Josh could coach Tom Kean, Jr. on impersonating a Democrat, so he too can finally land a new, plum job in Washington, as a made Democratic Congressman from Jersey, while staying true to his core values.

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