Angry New Yorker

Monday, May 12, 2003
No, New York, You Don't Pay Highest Taxes

By JANNY SCOTT, New York Times

"New Yorkers take a perverse pleasure in their city's superlatives. They pride themselves on its biggests and its bests, and congratulate themselves on enduring its worsts. They like to imagine that their city is at the top of every list. Or at the bottom. But not in the middle.

Taxes and deficits are suddenly the city's hottest superlatives: the budget deficit is the worst in decades; Mayor Michael R. Bloomberg's property tax increase is the biggest in history. The income tax rates and sales tax rates are gaining altitude, leaving New Yorkers feeling superlatively besieged.

No question, New Yorkers pay a lot in taxes and are about to pay more. But some studies that have compared the tax burden in cities and states nationwide in recent years show that New York City has not been at the top of the list for every tax rate and that all New Yorkers are not hit equally hard.

In a study published last summer by the District of Columbia comparing the taxes owed by families in the district and in each state's largest city, the overall major tax burden on lower-income New Yorkers was lower than the burden on comparable people in 24 of the cities studied, including Minneapolis and Seattle.

The more money New York families made, the higher their tax burdens rose in the rankings with the other cities. For families making $150,000 a year, the top income category studied, the tax burden in New York City ranked fifth — behind Bridgeport, Conn.; Newark; Providence, R.I.; and Des Moines.

In that study, based on 2001 data, the effective property tax rate in New York City, taking into account the assessment level, ranked fifth from the bottom, just above Cheyenne, Wyo. The gasoline tax rate in New York City was third from the bottom, one-quarter the rate in Las Vegas.

"In the lower-income categories, New York is very competitive," said Edmund J. McMahon, a fiscal analyst and senior fellow with the Manhattan Institute, a conservative research organization. "New York State's and New York City's tax code is designed to be very progressive and to favor poor people.

"It is, however, relatively heavy on the middle class and heaviest of all on upper-income people. When you start going up, New York's ranking starts creeping up with income."

Mr. McMahon added: "The higher your income, the more likely the city is going to impose a much higher tax burden than you will find elsewhere, even in expensive suburbs. Because if you have expensive housing in the city, you'll have a decent property tax bill, plus you'll have a high income tax bill."

A study of local property taxes, income taxes and sales taxes done in 2000 by the city's Independent Budget Office found that New York City homeowners paid significantly more taxes than their counterparts in the city's suburbs and upstate New York. Downstate homeowners paid more than those upstate.

But the average household income in the city and suburbs was 56 percent higher than the average upstate. Taking into account that greater ability to pay, the budget office concluded that the city's tax burden ranked 18th among all New York counties, 11 percent higher than the average in the rest of the state.

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Comparing the tax burdens of cities is difficult. Cities have different combinations of state and local taxes — property taxes, income taxes, sales taxes, vehicle taxes, liquor taxes, cigarette taxes, taxes on utility bills — and rates differ.

"A common thing happens," said Nicholas Johnson, director of the state fiscal project at the Center on Budget and Policy Priorities, a research institute in Washington. "I'm going to compare my jurisdiction to another. Well, it may be that the other jurisdiction levies some kinds of taxes I didn't know existed — a weird telecommunications tax or a special property tax."

One study, by the Tax Foundation, a tax research group supported by the tax departments of large corporations, tries to compute the total tax burden as a percentage of all income earned in each state, taking into account every tax, including taxes on corporate and personal income, cigarettes and liquor.

In that study, New York and Maine tied for first place in 2002 in combined state and local tax burdens. Critics suggest that the study exaggerates New York's tax burden by failing to adjust for the fact that some of the income tax revenue collected by New York comes from people living in other states...." [more]

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