[ New York Democratic legislators are trying to tax stock trades
and capital gains. Wall Street is horrified by such a development —
but luckily, their millions in campaign contributions have helped
create a solid friend in Andrew Cuomo.] [[link removed]]

ANDREW CUOMO WANTS TO PROTECT HIS WALL STREET DONORS FROM PAYING
TAXES   [[link removed]]

 

Matthew Cunningham-Cook
August 11, 2020
Jacobin
[[link removed]]


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_ New York Democratic legislators are trying to tax stock trades and
capital gains. Wall Street is horrified by such a development — but
luckily, their millions in campaign contributions have helped create a
solid friend in Andrew Cuomo. _

New York governor Andrew Cuomo speaks during the daily media briefing
on July 23, 2020 in New York City. , (Jeenah Moon / Getty Images)

 

In blocking his party’s push for new taxes on stock trades, capital
gains, and carried interest, New York governor Andrew Cuomo is
protecting the financial industry that has delivered millions to his
campaign and political operation, according to state records reviewed
by me. That includes the single-largest donor
[[link removed]] to
the state Democratic Party during Cuomo’s 2018 reelection bid, who
just delivered large donations to Cuomo as the governor has stymied
the tax proposals.

Last month, billionaire James Simons and his wife gave Cuomo $90,000
[[link removed]].
Simons is the founder of the hedge fund Renaissance Technologies,
which could be subject to the new levies being pushed by New York
Democratic legislators. In total, Cuomo has received over $280,000
from Simons and his family. The Cuomo-controlled New York Democratic
Party has received an additional $3.4 million from Simons.

Cuomo’s political machine has received big donations from other
hedge fund moguls including Dan Loeb ($197,000) and Stanley
Druckenmiller ($60,800), who could also be impacted by the Democratic
tax initiatives aimed at the financial industry.

Democratic legislators have been pushing the tax measures to raise new
revenues that they say could be used to prevent budget cuts
[[link removed]] to
education, health care, and other state programs.

Disclosure records reviewed by me show that the financial industry has
been actively lobbying on the tax proposals in Albany — and Cuomo
has parroted their opposition to higher taxes on the rich.

“I literally talk to people all day long who are in their Hamptons
house who also lived here or in their Hudson Valley house or in their
Connecticut weekend house,” the governor said on August 3,
suggesting that billionaires and multimillionaires will leave New York
if higher taxes on the wealthy go through.

Michael Kink, the executive director of the labor-backed Strong
Economy for All Coalition in New York, told me that Cuomo’s work to
block progressive taxation is indicative of his warped priorities
overall.

“A governor that’s connected to reality would be examining every
single possible way of raising revenue in the time of crisis,” Kink
said. “When you’re so close to someone like James Simons, that
leads to you blocking the door to some of the biggest and most
important sources of revenue. There’s a door called the
billionaire’s tax — $5.5 billion a year. Cuomo strolls away from
that door. Then there’s the stock transfer tax door which is $13
billion a year. The vast majority of people who would pay are the
speculators who are diving in and out. James Simon, Dan Loeb, a lot of
Cuomo’s major donors are the ones that would pay that tax.”

Democratic Bills Target Wall Street

Cuomo has received more than $10 million
[[link removed]] from
the securities industry, according to data compiled by the National
Institute on Money In Politics. In the current legislative session,
the governor has refused to support three sets of Democratic tax plans
aimed at Wall Street.

One bill
[[link removed]] would
levy a 19 percent tax on investment income to eliminate the federal
benefits of the carried interest tax deduction, which allows private
equity and hedge fund managers to classify their income as capital
gains, which is taxed at 15 percent instead of the top tax bracket of
37 percent. It is dependent on the legislation being passed in
Massachusetts and Connecticut to go into effect. The compact carried
interest legislation already passed
[[link removed]] in
New Jersey in 2018.

Another bill
[[link removed]] would
impose a state-based surcharge that would equalize taxation between
capital gains and labor — in effect a more expansive piece of
legislation than the carried interest bill.

Finally, Democratic legislators have pushed legislation
[[link removed]] to
revive New York’s stock transfer tax. The stock transfer tax was in
existence in New York from 1905 to 1981, and is technically still on
the books, even though Cuomo previously tried to repeal it
[[link removed]].
The original tax’s revenue was split between the city and state of
New York. The state began rebating the tax to the payers in 1981
during the Hugh Carey administration which also oversaw the
restructuring of New York City by crushing austerity on the city’s
working class. Cuomo has pushed for the full repeal
[[link removed]] of
the tax.

Renaissance Technologies, led by Cuomo’s biggest donor Simons,
is reportedly
[[link removed]] involved
[[link removed]] in
“high-frequency trading” — a business that gained mass public
recognition after the publication in 2014 of Michael Lewis’s _Flash
Boys._ While secretive, the firm has been identified as a company
[[link removed]] that
“has made high-frequency finance a huge success” by Richard Olsen
[[link removed]], a Switzerland-based financial
technologist. Efforts to reinstate New York’s tax on stock trades or
financial transactions could threaten Renaissance’s profit margin.

Simons’s firm has also been fighting
[[link removed]] the
IRS over a potential $6 billion tax bill.

Wall Street’s Furious Lobbying in Albany

In blocking the tax measures, Cuomo is aiding some of Wall Street’s
most powerful companies and front groups that have been lobbying on
those bills in Albany.

For instance, the American Investment Council (AIC) and the Securities
Industry and Financial Markets Association (SIFMA) have been lobbying
on the Democratic proposals, according to state lobbying records. The
former represents major private equity firms and the latter represents
broker-dealers, investment banks, and asset managers.

The two trade associations have spent over $400,000 lobbying in Albany
during this legislative session. AIC began lobbying Albany for the
first time in 2019, after Democrats gained total control of the
legislature for the first time in decades.

AIC brought on lobbying firm Greenberg Traurig, which has funneled
over $130,000 to Cuomo over the years. SIFMA has employed two firms
— Reid, McNally & Savage and Brown & Weintraub, the latter of which
was founded by two aides to former Gov. Mario Cuomo.

State records show
[[link removed]] that
AIC has been lobbying against the carried interest proposal and an
additional proposal that would tax mezzanine debt, which is used to
finance private equity real estate transactions. SIFMA has also been
lobbying against the carried interest proposal as well as the
financial transaction tax, lobbying records show.
[[link removed]]

In a memo obtained by me, SIFMA told legislators in July that the
financial transaction tax proposal would result in Wall Street firms
“relocating personnel outside New York.”

The same week SIFMA’s letter was blasted out to legislators, Andrew
Cuomo’s office parroted the same line, telling Bloomberg News
[[link removed]]:
“In the digital age, it would be even easier for transactions to
simply be moved out of state to avoid the tax.”

Private equity giant Blackstone has also been lobbying on the carried
interest initiative, according to state records
[[link removed]].
Preserving lower tax rates for carried interest has been a personal
priority of Blackstone CEO Steve Schwarzman, who once characterized
[[link removed]] an
effort by the Obama administration to end the carried interest
loophole as being “like when Hitler invaded Poland in 1939.”

The governor has said he supports
[[link removed]] closing
the carried interest tax loophole, but it has never appeared in the
final budget, despite the governor’s expansive
[[link removed]] powers
over budgeting in New York.

Bill Mulrow, a top Blackstone executive, led Cuomo’s administration
between 2015 and 2017, when he rejoined the firm. In March, Cuomo
appointed Mulrow to help lead the state’s COVID-19 response.

Fox Business
[[link removed]] reported
in April that Mulrow is spending little time at Blackstone, and that
his boss, Schwarzman, “is said to be paying close attention to
Mulrow’s efforts because of the implications it has for Wall
Street.” Blackstone has spent $255,000 lobbying the legislature this
cycle.

If the tax measures do not pass, the state will be forced to balance
its budget with $8.2 billion worth of cuts to schools, hospitals, and
local governments.

“We are demanding that the superrich pay up,” said Jonathan
Westin, executive director of New York Communities for Change. “Many
of them have increased their wealth by billions and we should be
demanding that they pay so that the rest of us can live.”

Polls
[[link removed]] show
that New Yorkers prefer higher taxes on the rich over devastating cuts
to services.

_Matthew Cunningham-Cook has written for Labor Notes, the Public
Employee Press, Al Jazeera America, and the Nation._

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