(The Center Square) — New York and its municipalities are among the nation’s top taxers and highest spenders, which is contributing to an exodus of taxpayers fleeing to lower tax states, according to a new watchdog report.
The report by the Citizens Budget Commission, a nonpartisan watchdog group, found that New York state and local governments collected an average of $12,495 a year per capita— the highest in the nation — in 2023 and $153 per $1,000 of personal income, the second highest in the nation. The state and municipalities also are the third-highest spenders per capita in the country, the group said.
“Combined with affordability challenges, public safety concerns, and uneven public services, these fiscal facts threaten New York’s competitive advantage for residents and businesses,” the report’s authors wrote.
The report said New York’s personal income tax collections in 2023 were 112% higher than the national average; 35% higher than Massachusetts and 54% higher than California. It also collected the highest corporate taxes per $1,000 of state gross domestic product in the nation; 40% higher than New Jersey and 50% higher than Connecticut.
The state and local government also spent more per capita — $15,894 — than 47 states; 40% higher than the national average, or $11,385; 17% more than Massachusetts, 32% more than New Jersey, and 92% more than Florida, according to the report.
New York’s population is shrinking, with hundreds of thousands of residents fleeing to Florida, New Jersey and other low-tax states, according to the latest U.S. Census figures. The population decline has major implications for the states, revenue and tax collections, federal data shows.
The nonpartisan commission has long argued that New York’s outmigration is driven largely by the state’s highest-in-the-nation tax burden, a business sector struggling under excessive regulations and rising labor costs.
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.
The report’s authors suggested that the findings are a wake-up call for New York, saying the state’s long-term success depends on its ability to stay competitive and attract and retain residents and businesses.
“New York will not become more affordable and competitive by increasing taxes. To best compete for residents and businesses, New York should enhance its value proposition,” they wrote. “Taxes are one part of the value proposition equation. New York will not and does not need to be a low- or even average-taxing and spending state. But, given their relative standing, New York State and its localities should hold the line and preferably reduce taxes.”
The report comes as Gov. Kathy Hochul faces pressure from New York City Mayor Zohran Mamdani to increase state taxes to foot the bill for his lefty agenda, which includes tuition-free public colleges and bus service and universal childcare. Mamdani, a democratic socialist, has pledged to increase taxes on corporations and push for a new wealth tax on New York City’s highest earners.
Hochul has signaled that she is unlikely to support tax increases in her upcoming budget proposal for the next fiscal year, but hasn’t ruled out higher taxes to pay for expanded universal child care programs.
New York state is facing a projected budget deficit of more than $10 billion in the next fiscal year, with revenue gaps widened by federal cuts and funding freezes.
