If elected mayor, Fernando Ferrer wants to sock Wall Street with $1 billion a year in taxes to improve the city’s schools, the candidate announced yesterday – a day when the Dow Jones Index sank to its 2005 low.

Unveiling the first public-policy proposal of his campaign, Mr. Ferrer spoke at Pace University, in the heart of the Financial District, where he bemoaned the city’s “education crisis” and Mayor Bloomberg’s “failure of leadership” in securing billions of dollars that state courts have determined New York State owes the city school system, as the result of a lawsuit filed a decade ago by the Campaign for Fiscal Equity. In February, Justice Leland DeGrasse of state Supreme Court at Manhattan ordered that an additional $23 billion must be paid to the city’s school system over the next five years, but he did not specify what portion of that amount should be drawn from the city’s coffers. Mr. Bloomberg has maintained that the city should not pay anything more to receive a court-ordered infusion of funds for its schools. Mr. Ferrer, however, has said the city should contribute 25% of the total, or $3.5 billion – the percentage suggested by the Campaign for Fiscal Equity.

To finance the city payment, the former Bronx borough president would drum up $4 billion by reinstating the stock-transfer tax at the New York Stock Exchange, a levy eliminated in 1981. Mr. Ferrer’s tax would be instituted at one-tenth the rates of the previous tax and would sunset after four years, he said.

The rate of the tax would depend on the value of the stock. For a share sold at $20 or more, Mr. Ferrer would levy a tax of half a cent for each share purchased. For stocks purchased at between $10 and $20 a share, the tax would be 0.375 cents a share. For stocks purchased at between $5 and $10 a share, the tax would be 0.25 cents a share. A 0.125-cent-a-share tax would be levied on stocks sold for less than $5 a share.

The tax is oddly regressive. The purchaser of a single share of Berkshire Hathaway Class B stock, which closed yesterday at $2,824, would pay a tax of half a cent. The purchaser of 100 shares of a $28 stock would pay 50 cents. At the same time, for penny stocks theoretically the tax rate, as a percentage of the gross purchase price, could be astronomically higher than the 0.02% overall average rate touted by the Ferrer campaign.

The maximum tax imposed on any single sale of stock, Mr. Ferrer said, would be $35.

Mr. Ferrer projected that the tax would bring $1 billion a year to the city, which he pledged to spend on restoring after-school programs, enhancing teacher quality, ending overcrowding in schools, improving school facilities, and increasing music, art, physical-education, special-education, and English language programs.

Having Wall Street bail out city schools, Mr. Ferrer said during his prepared remarks, was a matter not only of “civic duty” but also of “self-interest.” He likened the city’s present situation to the 1975 budget crisis, when financial services leaders “rolled up their sleeves … to save New York City from bankruptcy.” Later, Mr. Ferrer called his plan a “moral imperative.”

Although his remarks came in the middle of a bearish streak at Wall Street, Mr. Ferrer tried preemptively to dismiss arguments that his tax would harm the financial-services industry, one of the city’s largest. The levy would be paid for, Mr. Ferrer said, by “the investor who has injected volatility into our financial markets by confusing Wall Street with Las Vegas.”

Moreover, the share of the burden not carried by stock speculators would be widely distributed outside the city. “Because many shareholders live elsewhere, a big part of this would be shouldered by wealthy investors in other states,” Mr. Ferrer said.

Some in the financial-services industry, however, felt it was New York that stood to lose the most from Mr. Ferrer’s proposal.

A leading Wall Street commentator, James Cramer, expressed doubt that Mr. Ferrer would realize the billions he hoped to extract from the industry.

“We’re not foolish on Wall Street,” he said. “We’ll figure out a way to get around it.”

Stock trades, Mr. Cramer said, could just as easily be accomplished at Boston or Chicago, or on the Internet. “I feel for people trying to come up with new ways to raise capital,” he said, “but one that would drive the NYSE into a bowling alley sooner than expected seems stupid to me.”

A securities industry analyst at Sanford C. Bernstein, Brad Hintz, also said Mr. Ferrer’s proposal would only provide further incentive to move market and financial-services activity out of New York. The city’s business climate, he said, was already hostile. As evidence, he pointed to the migration of financial services companies to Connecticut. UBS maintains headquarters at Stamford, and several hedge funds have set up shop at Greenwich, just across the border with New York State.

“The market seeks the lowest place to execute trades,” Mr. Hintz said, adding that the flexibility afforded by electronic trading would make it easier to shift the financial-services industry out of New York – taking jobs along with it.

The New York Stock Exchange, in a statement sent by e-mail, labeled Mr. Ferrer’s plan “bad public policy.”

“The New York City Independent Budget Office itself produced a study which concluded that tens of thousands of jobs would be lost and city revenues would be negatively impacted as a result,” the statement said.

A spokesman for the Bloomberg campaign, Stu Loeser, likewise cited the budget office’s 2003 study and the danger of job losses in denouncing Mr. Ferrer’s proposal.

“While Mike Bloomberg is trying to create 135,000 jobs by bringing the Olympics here, Freddy Ferrer’s $4 billion job-killing tax hike would – according to his own study – eliminate 12,000 jobs in New York City,” Mr. Loeser said in a statement.

The budget office prepared its study in November 2003, when the state Assembly was looking to reinstitute the stock-transfer tax. It is cited as a source throughout the printed materials outlining Mr. Ferrer’s proposal. Because Mr. Ferrer’s proposed tax is touted as one fifth the size of the Assembly’s 2003 proposal – and because the Independent Budget Office said the Assembly plan would cost New York 60,000 jobs – the 12,000 estimate from the Bloomberg campaign reflects one-fifth of the budget-office estimate.

That loss of jobs, and of the accompanying income-tax revenue, would end up costing a Ferrer administration the very revenue it seeks for the city’s schools, Wall Street experts said, in addition to damaging the financial-services industry.

Mr. Ferrer’s plan, however, was not without compensation for Wall Street leaders. To oversee how the $4 billion generated by the stock-transfer tax is spent, Mr. Ferrer would create an accountability board composed of parents, educators, community representatives – and “leaders of the financial services industry.”

Furthermore, from the $4 billion he would take from Wall Street, Mr. Ferrer would direct $250 million back to the industry, for upgrades in technology and infrastructure.

Some of Mr. Ferrer’s Democratic rivals were unimpressed.

In what was probably the Democratic race’s harshest intra-party attack yet, a congressman whose district straddles Brooklyn and Queens, Anthony Weiner, called Mr. Ferrer’s proposal “sheer folly” and ridiculed it as akin to Wisconsin imposing a tax on dairy products.

The speaker of the City Council, Gifford Miller, said New York should raise funds for education “without paying a dime more in new taxes.” He said Mr. Ferrer’s proposal would “risk driving jobs out of the city.”

A factor in the displeasure of Messrs. Weiner and Miller, however, could have been the realization that, according to some political consultants, Mr. Ferrer probably scored political points with his proposal.

A professor of political science at Baruch College, Douglas Muzzio, praised Mr. Ferrer’s announcement as a smart tactical move, insofar as it directed attention away from the candidate’s comments about the Amadou Diallo shooting, which have haunted him at nearly every public appearance in the month since he made them.

A professor of public administration at Columbia University, Steven Cohen, also felt the redirection from the Diallo flap was wise on Mr. Ferrer’s part, but he expressed misgivings about the premise of the candidate’s policy proposal: namely, that the city needs to pay any share of the bill from the Campaign for Fiscal Equity case.

Indeed, Mr. Ferrer’s Democratic rivals all told The New York Sun last week that they thought the city should have to spend little or no money to receive the court-ordered funds. Mr. Ferrer’s acquiescence to requests that the city pay $3.5 billion, Mr. Cohen said, “is like bargaining before you have to.”

Getting Wall Street to pay for city schools, however, “is certainly something that will appeal to his base, which are largely people who do not own and trade stocks,” Mr. Cohen said.

The Ferrer proposal may not play as well at Albany, where opposition could kill it altogether. Reinstating the tax would require approval from the governor and state legislators. And for them, next year is an election year.