NEWS RELEASE

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

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:

• New York's combined state and local taxes on individual income are more than twice the national average, as are corporate income taxes, on a per-capita basis.
  
  
• Local taxes in New York are especially out of line, at more than twice the national average per person. At $1,328 per resident, property taxes in the Empire State were 4th-highest in the nation, and 50 percent above average.
  
  
• General sales taxes, per capita, were 14 percent higher in New York than nationally. Sales and gross receipts taxes on utilities were 78 percent higher than the national average.
  
  
• Overall state and local spending in New York is 46 percent above the national average, at more than $9,000 per person.
  
  
• New York is, by far, the national leader on social-services spending (including Medicaid), at $2,163 per capita. That figure is 67 percent higher than the national average , and more than $400 per person ahead of the second-highest state, Alaska.
  
  
• New York's spending priorities differ dramatically from those of most states. Nationwide, education spending is an average 43 percent higher than social spending. New York is the only state in the nation where governments spend more on social services than on education; still, its education spending per capita is 16 percent higher than the national average.
  
  
• State and local government debt is far higher in New York than in most states, at $9,357 per person. Albany and localities around the state spent $9.3 billion on interest in fiscal 2000. That figure was more than 13 percent of the nationwide total for states and localities, although New York has only 6.7 percent of U.S. population.

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 $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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