New York has the Third Highest Tax Burden in the Nation for 2011

Oct 11, 2013

In Fiscal Year (FY) 2011, New York collected $144.7 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average New York taxpayer can afford this level of taxation.

As shown in the charts below, New York’s state and local tax burden (tax collections divided by personal income) was the third highest in the nation for FY 2011 at 14.7 percent—or 40.3 percent above the national average of 10.5 percent. More troubling, the tax burden has grown over time by a whopping 80.8 percent to 14.7 percent in FY 2011 from 8.1 percent in FY 1950.

Unlike Alaska or North Dakota, New York’s high state and local tax burden is driven by the fact that they have every tax imaginable and at very high tax rates. For instance, at the state level New York has the highest cigarette excise tax in the country ($4.35 per pack) and the eight highest top individual income tax rate in the country (8.82 percent). The income tax rate, however, is misleading because New York has an awful recapture provision which eliminates the tax benefits of lower marginal tax rates for high income taxpayers.

As bad as the state level taxes are, it gets much worse when local taxes are factored in, especially in New York City:

  • New York City levies an additional $1.50 per pack of cigarettes bringing the total state and local tax to $5.85. 

  • New York City levies an additional 4.5 percent sales tax bringing the total state and local tax to 8.5 percent.  If New York City were a state that would be the highest sales tax rate in the country.

  • New York City levies an additional 3.876 percent on the highest earners under the individual income tax bringing the total state and local tax to 12.696 percent. If New York City were a state that would be the second highest individual income tax rate in the country—behind California’s 13.3 percent tax rate.

  • New York City levies an additional 8.85 percent on corporations bringing the total state and local tax rate to 15.95 percent. If New York City were a state that would the highest corporate income tax rate in the country.

  • Adding insult to injury, New York City also levies a unique 4 percent tax on partnerships and proprietorships known as the Unincorporated Business Tax.

Ironically, New York has significant capacity in oil and gas resources to emulate Alaska’s and North Dakota’s path to tax riches. Alas, New York decided in 2010 to ban the new process of hydraulic fracturing into the oil and gas rich Marcellus Shale in the southern portion of the state. The economic and tax boom that would result in such drilling could be the answer to lowering New York’s nosebleed tax rates.


Click here to view tax burden data.



Category: Tax Burdens

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.

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