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For Release — Thursday, December 19, 2002

INSTITUTE ANALYSIS: NEW YORK'S 'TAX GAP' STILL BIG, BUT SHRINKING; SEPARATE STUDY SHOWS STATE'S 'TAX EFFORT' STILL NATION'S HIGHEST

ALBANY—The "tax gap" between New York and other states is at its smallest since the 1970s, but New Yorkers still bear a heavier tax burden than most Americans, a Public Policy Institute analysis of new U.S. Census Bureau data shows.

As of fiscal 2000, combined state and local taxes in the Empire State averaged $4,578 for every resident — some 48 percent above the average for all states. That gap in per-capita taxes was 60 percent in 1994, and is now at its lowest level since 1979, The Institute's analysis found.

Using another common measure, taxes as a share of personal income, New Yorkers' tax burden is 25.8 percent above the national average. Measured that way, the tax gap in New York is at its lowest since 1972, according to the Institute.

The Institute outlined its analysis of the new Census data in its latest Budget Watch '03, issued today. The Census Bureau posted the state and local financial data for all 50 states on its website on Friday, Dec. 13.

According to the new Census data, New York's combined state-and-local tax burden is second-highest in the nation, behind Connecticut. Measured by taxes as a share of income, taxes in New York are the highest in the country.

The Institute's Budget Watch is posted at www.ppinys.org/budget/budget_watch_03_issue11_taxgap.pdf. The Census report is available at www.census.gov/govs/www/estimate00.html.

The Institute also reported on another new comparison of state tax burdens published in the latest edition of New England Economic Review, the journal of the Federal Reserve Bank of Boston.

Federal Reserve economists compared all the states using an index that measures "tax effort"—how much state and local governments raise in comparison to what their economies can afford.

New York's tax effort was highest in the country, and 44 percent above the average for all states, in 1997, the new Federal Reserve Bank study found. That gap was down from 55 percent in 1994, according to the study. This study is available at www.bos.frb.org/economic/neer/neer2002/neer302b.pdf.

"New York is more competitive for business and jobs today because Governor Pataki and the Legislature have cut taxes," said Daniel B. Walsh, president of The Business Council and CEO of The Public Policy Institute. "We need to keep moving forward in reducing the size and cost of government at all levels."

The new Census data on state and local government finances also showed:

The Public Policy Institute, the research affiliate of The Business Council, launched Budget Watch '03 Nov. 7 to focus attention on spending issues that are at the root of the state's looming fiscal challenge. If the state had held overall state-funds spending to the rate of inflation over the last five years, the state could have saved $7.9 billion in the current year. All reports in the Budget Watch series can be accessed from www.ppinys.org/bwatch03.htm.

State and Local Taxes Per Capita, 2000
Rank
State
Amt.
 
Rank
State
Amt.
1
Connecticut
$4,595
 
27
Iowa
$2,765
2
NEW YORK
$4,578
 
28
North Dakota
2,754
3
New Jersey
3,903
 
29
Oregon
2,751
4
Massachusetts
3,787
 
30
Indiana
2,691
5
Minnesota
3,694
 
31
North Carolina
2,664
6
Alaska
3,687
 
32
New Hampshire
2,652
7
California
3,545
 
33
New Mexico
2,639
8
Wisconsin
3,458
 
34
Utah
2,630
9
Maryland
3,454
 
35
Florida
2,624
10
Hawaii
3,384
 
36
Arizona
2,599
11
Maine
3,343
 
37
Missouri
2,558
12
Delaware
3,340
 
38
Idaho
2,546
13
Rhode Island
3,256
 
39
Kentucky
2,517
14
Illinois
3,241
 
40
Texas
2,505
15
Washington
3,178
 
41
Louisiana
2,436
16
Michigan
3,167
 
42
West Virginia
2,413
17
Vermont
3,080
 
43
Oklahoma
2,391
18
Colorado
3,073
 
44
South Carolina
2,379
19
Wyoming
3,046
 
45
Montana
2,363
20
Ohio
3,016
 
46
South Dakota
2,299
21
Pennsylvania
2,979
 
47
Arkansas
2,230
22
Virginia
2,978
 
48
Mississippi
2,214
23
Nevada
2,915
 
49
Tennessee
2,185
24
Nebraska
2,906
 
50
Alabama
2,117
25
Georgia
2,841
  U.S. average
$3,100
26
Kansas
2,833
  N.Y.S. % above avg.
47.70%
Source: Public Policy Institute calculations from U.S. Census Bureau data

 

State and Local Taxes Per $1,000 Personal Income, 2000
Rank
State
Amt.
 
Rank
State
Amt.
1
NEW YORK
$141
 
27
Louisiana
$110
2
Maine
139
 
28
Nebraska
110
3
Alaska
132
 
29
Maryland
109
4
Wisconsin
129
 
30
Kansas
109
5
New Mexico
127
 
31
Georgia
109
6
Hawaii
126
 
32
Illinois
108
7
Minnesota
124
 
33
Washington
107
8
California
121
 
34
Pennsylvania
107
9
Vermont
121
 
35
Oklahoma
107
10
Utah
120
 
36
Arkansas
106
11
Connecticut
120
 
37
North Carolina
106
12
North Dakota
119
 
38
Oregon
106
13
Rhode Island
119
 
39
Indiana
106
14
Wyoming
117
 
40
Nevada
105
15
West Virginia
116
 
41
South Carolina
105
16
Delaware
115
 
42
Colorado
103
17
Idaho
114
 
43
Virginia
103
18
Michigan
114
 
44
Missouri
99
19
New Jersey
114
 
45
Florida
99
20
Ohio
112
 
46
Texas
97
21
Kentucky
112
 
47
South Dakota
94
22
Iowa
111
 
48
Alabama
94
23
Massachusetts
111
 
49
Tennessee
88
24
Arizona
111
 
50
New Hampshire
88
25
Mississippi
111
  U.S. average
$112
26
Montana
110
N.Y.S. % above avg.
25.8%
Source: Public Policy Institute calculations from U.S. Census Bureau data
Dollar figures are rounded

 

Index of State and Local Governments' Tax Effort, 1997
Rank
State
Amt.
 
Rank
State
Amt.
1
NEW YORK
144
 
27
North Dakota
96
2
Minnesota
122
 
28
North Carolina
96
3
Connecticut
121
 
29
Arkansas
95
4
Wisconsin
121
 
30
Hawaii
93
5
Rhode Island
118
 
31
Missouri
92
6
Maine
112
 
32
Florida
91
7
New Jersey
112
 
33
Texas
91
8
Alaska
110
 
34
Georgia
91
9
Massachusetts
109
 
35
Delaware
90
10
Michigan
106
 
36
Utah
90
11
Washington
105
 
37
South Carolina
90
12
Pennsylvania
104
 
38
Virginia
89
13
Kansas
103
 
39
Louisiana
89
14
Ohio
102
 
40
California
88
15
Vermont
102
 
41
Montana
87
16
Mississippi
102
 
42
Oregon
85
17
Illinois
102
 
43
Arizona
84
18
Nebraska
101
 
44
Colorado
83
19
Maryland
100
 
45
Alabama
82
20
West Virginia
100
 
46
Tennessee
81
21
Iowa
100
 
47
South Dakota
79
22
Indiana
99
 
48
New Hampshire
79
23
Kentucky
97
 
49
Wyoming
77
24
Idaho
97
 
50
Nevada
73
25
Oklahoma
97
  U.S. average
100
26
New Mexico
97
  N.Y.S. % above avg.
44%
Source: Federal Reserve Bank of Boston

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