A new report from New York Comptroller Thomas DiNapoli found that New Yorkers pay 30% more in federal taxes than the national average as residents of the Empire State sent roughly $24 billion more to the federal government last year than the state received back in federal spending.
New York generated almost $250 billion for the treasury during the 2017 fiscal year, which ended September 30, 2017. This amounts to $12,588 per person, which is roughly 30% more per capita than the US average.
From the government, New Yorkers received only $11,372 per resident, a number that the comptroller study reported as “below average”. Out of all US states, this ranks New York 47th for the difference between taxes paid by residents and federal spending received.
The state’s per capita shortfall amounted to $1,216 per person (New Jersey was last, in 50th place, with a shortfall of nearly $3,000.)
States like New York that have higher tax burdens were negatively affected by parts of the federal tax cuts signed by President Trump back in December of last year. These cuts limited property taxes and other deductions to just $10,000. Despite the comptroller’s report stating that it’s “too early” to predict exactly how these changes will affect the balance of payments in higher tax burden states, some of the ripple effects are already being seen.
Just a few weeks ago we discussed the curious case of New York residents who chose to skirt new tax thresholds by renting – for up to $10,000/month – outside of the state. We highlighted a couple who signed a two year rental lease in March for a five bedroom house in the Old Hill section of Westport; they stated that the change in federal tax law was definitely a factor behind their choice to rent instead of buying.
The BofA chart below that we highlighted back in June is also useful for two reasons, first, it shows the states most reliant on individual income taxes from the Census Bureau’s most recent annual survey of tax statistics. Oregon – at 69.4% of total tax collections – is most reliant on individual income taxes, followed by Virginia (57.7%), New York (57.2%), Massachusetts (52.9%) and California (52.0%).
It also shows the full relative breakdown of how states collect revenues, from the Individual income tax-free states such as Florida, Texas, Washington, Tennessee, and Nevada, to the sales tax-free Alaska, Vermont and Oregon, to the severance-tax heavy Wyoming, North Dakota and Alaska, and everyone in between. For New York, which is heavily reliant on Income Tax to fund itself, the bad news is that the annual tax obligation will only keep rising for the foreseeable (and beyond) future.
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