The single-sales factor works. Here's proof

February 12, 2001

In its report criticizing single-sales factor taxation for New York State, the Fiscal Policy Institute makes specific reference to experiences in Iowa, Missouri, Massachusetts and Illinois. FPI claims that experience shows that "states that have adopted SSFF so far do not have a great deal to show for it."

Actually, the manufacturing sector in each of those states has outperformed New York's since 1980, the earliest year FPI uses for comparison. (See table below.)

Even more importantly, Massachusetts and Illinois have seen stronger performance in manufacturing employment, relative to the rest of the country, since starting to phase in single-sales in 1995 and 1998, respectively, as shown below. That's the basic premise of single-sales taxation for New York.

The Public Policy Institute's recent report on single-sales taxation examined numerous changes in state apportionment formulas over 20 years and found that increasing the weight on the sales factor improves job growth relative to the rest of the country. The data below provides some specific examples.

Manufacturing employment (thousands)
	New York	Illinois	Iowa	Massachusetts	Missouri	United States
1980	1426.8	1162.3	239.6	671.2	431.6	20,190
1990	1097.9	969.3	235	508.7	436.2	18,780
1995	937	966.3	250.7	451	423.2	18,523
1996	923.2	974.2	251.9	446.7	419.4	18,560
1998	903	969.2	262.8	443.2	417.7	18,715
2000	876.6	946.5	262	433.1	400.7	18,317
20-year % chg.	-38.6%	-18.6%	9.3%	-35.5%	-7.2%	-9.3%
20-year net chg.	-550.2	-215.8	22.4	-238.1	-30.9	-1873
10-year % chg.	-20.2%	-2.4%	11.5%	-14.9%	-8.1%	-2.5%
10-year net chg.	-221.3	-22.8	27	-75.6	-35.5	-463
5-year % chg.	-6.4%	-2.0%	4.5%	-4.0%	-5.3%	-1.1%
5-year net chg.	-60.4	-19.8	11.3	-17.9	-22.5	-206
2-year % chg.	-2.9%	-2.3%	-0.3%	-2.3%	-4.1%	-2.1%
2-year net chg.	-26.4	-22.7	-0.8	-10.1	-17	-398
				December data (2000 are preliminary)

New York compared to Iowa and Missouri
Manufacturing jobs New York lost, 1980-2000 .................
If the change in New York manufacturing employment, 1980-2000, had.
.matched the gains in Iowa, New York would have gained ...........	132,692	jobs
.matched the rate of loss in Missouri, New York would have retained an extra ..	448,050	jobs

Massachusetts and Illinois compared to the national average, before and after SSF
	Mass.	U.S.		Illinois	U.S.
Chg., 1980-95	-32.8%	-8.3%	Chg., 1980-98	-16.6%	-7.3%
Chg., 1990-95	-11.3%	-1.4%	Chg., 1996-98	-0.5%	4.3%
Chg., 1995-00	-4.0%	-1.1%	Chg., 1998-00	-2.3%	-2.1%

Relative job loss, Massachusetts compared to U.S., 1990-95: 11.3 to 1.4, or 8.1 to 1
Relative job loss, Massachusetts compared to U.S., 1995-00: 4.0 to 1.1, or 3.6 to 1
Manufacturing jobs Massachusetts would have lost, 1995-00, if it had maintained
previous rate of growth compared to national economy:					40,184
Actual manufacturing jobs Massachusetts lost, 1995-00:					17,900
*Massachusetts' job "gain" after SSF, compared to previous:*					22,284

Relative job gain factor, Illinois compared to U.S., 1996-98: 0.8 to 4.3, or .19 to 1
Relative job loss factor, Illinois compared to U.S., 1998-00: -2.3 to -2.1, or 1.1 to 1
If Illinois had continued performing as badly, relative to the nation, as it did in 1996-98, it would have lost thousands of additional manufacturing jobs from 1998 to 2000.