Report: New York has highest tax burden in nation



(The Center Square) — New York taxpayers spend nearly 14% of their income paying state and local taxes, the highest per capita rate in the nation, according to a Tax Foundation report.

The report, released on Tuesday by the Washington, D.C.-based tax watchdog, said on average, New Yorkers paid $10,266 in combined state and local taxes in 2021, the most recent year the foundation studied.

That’s second only to the District of Columbia, where taxpayers shelled out an average of $13,278 in per capita tax collections.

New York’s neighbors, Connecticut ($9,458 per capita taxes in FY21) and New Jersey ($8,303), were ranked #2 and #4, respectively, in the Tax Foundation report.

Alaska ($4,192), Alabama ($4,245) and Tennessee ($4,272) had the lowest combined tax burdens.

Jared Walczak, the foundation’s vice president of state projects and lead author of the report, said despite the fiscal impacts of the COVID-19 pandemic in fiscal year 2021, state and local governments fared well financially.

“Contrary to initial expectations, the pandemic years were good for state and local tax collections, and while the surges of 2021 and 2022 have not continued into calendar year 2023, revenues remain robust in most states and well above pre-pandemic levels even after accounting for inflation,” he said in a statement.

Nationwide, state and local tax collections have risen more than 27% since FY 2019, the last full fiscal year before the pandemic. Much of the gains have been eaten up by inflation, but even accounting for that, overall taxes have increased nationally by at least 7% during that period, the foundation said.

Despite the fiscal gains, New York is among a minority of high-tax states — including California — that rely heavily on high marginal income tax rates and saw overall revenue declines in fiscal year 2021, according to the report.

“Not only are these states more vulnerable to income fluctuations among high earners — an important source of volatility — but in an increasingly mobile environment, they’re driving some of those high earners to other states as well,” Walczak wrote.

New York has a graduated individual income tax, with rates ranging from 4% to 10.90%. There are also cities, towns and counties that collect local income taxes.

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