New Jersey May Lose Wall Street’s Data Centers
A new proposal in the state legislature suggests a tax on financial transactions, which has prompted executives to look into relocation to other states.
The Garden State may soon lose a major tenant type: data centers being used by Wall Street.
Following the proposal of a tax in New Jersey on trading in US financial markets, finance executives are sniffing around new locations in Texas, Virginia and other states that would provide safe harbor from such a levy, according to S&P Global Market Intelligence.
“We don’t want to do it but we’re having to seriously consider it,” said Vlad Khandros, UBS Group AG’s global head of market structure and liquidity strategy and global co-head of principal investments and strategic ventures, as well as a representative of an industry wide group fighting the tax called the Coalition to Prevent the Taxing of Retirement Savings.
The legislation would particularly impact retail and institutional investors the hardest with worse trading conditions and higher prices, according to the group, which includes the Intercontinental Exchange Inc.-owned New York Stock Exchange and Nasdaq.
Introduced by New Jersey Senate President Stephen Sweeney (D), the bill suggests assessing $0.0025 on each financial transaction made with electronic equipment housed in the state. Assemblyman John McKeon first introduced the same tax earlier this year, noting that the collection of such fees could put $10 billion of annual revenue into the state’s coffers.
Such a move, or at least the suggestion of it, isn’t without precedent. States with a large showing in the finance industry, such as New York and Illinois, have reviewed the idea of financial transaction taxes, and in Vermont and Hawaii, Senators Bernie Sanders (I) and Brian Schatz (D), respectively both have put forth the idea.
New Jersey Governor Phil Murphy—a former finance executive who served at Goldman Sachs—is in favor of the tax, calling it a “good idea,” and noting that the tax may help the state close the wealth gap of its residents.
But that’s disputed in a statement by Kenneth Bentsen Jr., president and CEO of the Securities Industry and Financial Markets Association. “We believe the proposal is far more likely to harm New Jersey investors and its overall economy than to achieve its revenue forecasts.”