ALBANYThe "tax gap" between New York and other states is at its smallest since the 1970s, but New Yorkers still bear a heavier tax burden than most Americans, a Public Policy Institute analysis of new U.S. Census Bureau data shows.
As of fiscal 2000, combined state and local taxes in the Empire State averaged $4,578 for every resident — some 48 percent above the average for all states. That gap in per-capita taxes was 60 percent in 1994, and is now at its lowest level since 1979, The Institute's analysis found.
Using another common measure, taxes as a share of personal income, New Yorkers' tax burden is 25.8 percent above the national average. Measured that way, the tax gap in New York is at its lowest since 1972, according to the Institute.
The Institute outlined its analysis of the new Census data in its latest Budget Watch '03, issued today. The Census Bureau posted the state and local financial data for all 50 states on its website on Friday, Dec. 13.
According to the new Census data, New York's combined state-and-local tax burden is second-highest in the nation, behind Connecticut. Measured by taxes as a share of income, taxes in New York are the highest in the country.
The Institute's Budget Watch is posted at www.ppinys.org/budget/budget_watch_03_issue11_taxgap.pdf. The Census report is available at www.census.gov/govs/www/estimate00.html.
The Institute also reported on another new comparison of state tax burdens published in the latest edition of New England Economic Review, the journal of the Federal Reserve Bank of Boston.
Federal Reserve economists compared all the states using an index that measures "tax effort"how much state and local governments raise in comparison to what their economies can afford.
New York's tax effort was highest in the country, and 44 percent above the average for all states, in 1997, the new Federal Reserve Bank study found. That gap was down from 55 percent in 1994, according to the study. This study is available at www.bos.frb.org/economic/neer/neer2002/neer302b.pdf.
"New York is more competitive for business and jobs today because Governor Pataki and the Legislature have cut taxes," said Daniel B. Walsh, president of The Business Council and CEO of The Public Policy Institute. "We need to keep moving forward in reducing the size and cost of government at all levels."
The new Census data on state and local government finances also showed:
- New York's combined state and local taxes on individual income are more than twice the national average, as are corporate income taxes, on a per-capita basis.
- Local taxes in New York are especially out of line, at more than twice the national average per person. At $1,328 per resident, property taxes in the Empire State were 4th-highest in the nation, and 50 percent above average
- General sales taxes, per capita, were 14 percent higher in New York than nationally. Sales and gross receipts taxes on utilities were 78 percent higher than the national average.
- Overall state and local spending in New York is 46 percent above the national average, at more than $9,000 per person.
- New York is, by far, the national leader on social-services spending (including Medicaid), at $2,163 per capita. That figure is 67 percent higher than the national average , and more than $400 per person ahead of the second-highest state, Alaska.
- New York's spending priorities differ dramatically from those of most states. Nationwide, education spending is an average 43 percent higher than social spending. New York is the only state in the nation where governments spend more on social services than on education; still, its education spending per capita is 16 percent higher than the national average.
- State and local government debt is far higher in New York than in most states, at $9,357 per person. Albany and localities around the state spent $9.3 billion on interest in fiscal 2000. That figure was more than 13 percent of the nationwide total for states and localities, although New York has only 6.7 percent of U.S. population.
The Public Policy Institute, the research affiliate of The Business Council, launched Budget Watch '03 Nov. 7 to focus attention on spending issues that are at the root of the state's looming fiscal challenge. If the state had held overall state-funds spending to the rate of inflation over the last five years, the state could have saved $7.9 billion in the current year. All reports in the Budget Watch series can be accessed from www.ppinys.org/bwatch03.htm.
State and Local Taxes Per Capita, 2000 Rank State Amt. Rank State Amt. 1 Connecticut $4,595 27 Iowa $2,765 2 NEW YORK $4,578 28 North Dakota 2,754 3 New Jersey 3,903 29 Oregon 2,751 4 Massachusetts 3,787 30 Indiana 2,691 5 Minnesota 3,694 31 North Carolina 2,664 6 Alaska 3,687 32 New Hampshire 2,652 7 California 3,545 33 New Mexico 2,639 8 Wisconsin 3,458 34 Utah 2,630 9 Maryland 3,454 35 Florida 2,624 10 Hawaii 3,384 36 Arizona 2,599 11 Maine 3,343 37 Missouri 2,558 12 Delaware 3,340 38 Idaho 2,546 13 Rhode Island 3,256 39 Kentucky 2,517 14 Illinois 3,241 40 Texas 2,505 15 Washington 3,178 41 Louisiana 2,436 16 Michigan 3,167 42 West Virginia 2,413 17 Vermont 3,080 43 Oklahoma 2,391 18 Colorado 3,073 44 South Carolina 2,379 19 Wyoming 3,046 45 Montana 2,363 20 Ohio 3,016 46 South Dakota 2,299 21 Pennsylvania 2,979 47 Arkansas 2,230 22 Virginia 2,978 48 Mississippi 2,214 23 Nevada 2,915 49 Tennessee 2,185 24 Nebraska 2,906 50 Alabama 2,117 25 Georgia 2,841 U.S. average $3,100 26 Kansas 2,833 N.Y.S. % above avg. 47.70% Source: Public Policy Institute calculations from U.S. Census Bureau dataState and Local Taxes Per $1,000 Personal Income, 2000 Rank State Amt. Rank State Amt. 1 NEW YORK $141 27 Louisiana $110 2 Maine 139 28 Nebraska 110 3 Alaska 132 29 Maryland 109 4 Wisconsin 129 30 Kansas 109 5 New Mexico 127 31 Georgia 109 6 Hawaii 126 32 Illinois 108 7 Minnesota 124 33 Washington 107 8 California 121 34 Pennsylvania 107 9 Vermont 121 35 Oklahoma 107 10 Utah 120 36 Arkansas 106 11 Connecticut 120 37 North Carolina 106 12 North Dakota 119 38 Oregon 106 13 Rhode Island 119 39 Indiana 106 14 Wyoming 117 40 Nevada 105 15 West Virginia 116 41 South Carolina 105 16 Delaware 115 42 Colorado 103 17 Idaho 114 43 Virginia 103 18 Michigan 114 44 Missouri 99 19 New Jersey 114 45 Florida 99 20 Ohio 112 46 Texas 97 21 Kentucky 112 47 South Dakota 94 22 Iowa 111 48 Alabama 94 23 Massachusetts 111 49 Tennessee 88 24 Arizona 111 50 New Hampshire 88 25 Mississippi 111 U.S. average $112 26 Montana 110 N.Y.S. % above avg. 25.8% Source: Public Policy Institute calculations from U.S. Census Bureau data Dollar figures are rounded
Index of State and Local Governments' Tax Effort, 1997 Rank State Amt. Rank State Amt. 1 NEW YORK 144 27 North Dakota 96 2 Minnesota 122 28 North Carolina 96 3 Connecticut 121 29 Arkansas 95 4 Wisconsin 121 30 Hawaii 93 5 Rhode Island 118 31 Missouri 92 6 Maine 112 32 Florida 91 7 New Jersey 112 33 Texas 91 8 Alaska 110 34 Georgia 91 9 Massachusetts 109 35 Delaware 90 10 Michigan 106 36 Utah 90 11 Washington 105 37 South Carolina 90 12 Pennsylvania 104 38 Virginia 89 13 Kansas 103 39 Louisiana 89 14 Ohio 102 40 California 88 15 Vermont 102 41 Montana 87 16 Mississippi 102 42 Oregon 85 17 Illinois 102 43 Arizona 84 18 Nebraska 101 44 Colorado 83 19 Maryland 100 45 Alabama 82 20 West Virginia 100 46 Tennessee 81 21 Iowa 100 47 South Dakota 79 22 Indiana 99 48 New Hampshire 79 23 Kentucky 97 49 Wyoming 77 24 Idaho 97 50 Nevada 73 25 Oklahoma 97 U.S. average 100 26 New Mexico 97 N.Y.S. % above avg. 44% Source: Federal Reserve Bank of Boston
-30-