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November 10, 2003

Report: New York's local tax burden dwarfs the national average

New York State is home to the highest local taxes in the nation, more than 70 percent above the national average, according to a new study by the Citizens Budget Commission (CBC).

In fact, New York's overall tax burden, and its local taxes in particular, dwarf even those in comparably large and urbanized competitor states with similar economic profiles and histories, the study shows.

"Excessive local government taxes are only one part of a broader and troubling pattern of state fiscal practices that includes extraordinary debt levels and looming multi billion dollar budget gaps," said Charles Brecher, CBC research director and professor at NYU's Wagner School.

"These practices must be improved, if New York is to compete more effectively with other states."

"Among the 11 large, urbanized states with which New York most directly competes, six have local tax burdens below the national average, and the second highest is New Jersey, where taxes are 20 percent above the national average," the report said.

The report also found that, when measured as a proportion of personal income, New York's combined state and local tax burden is 26 percent above the national average. The state with the second highest tax burden, California, is far behind New York at only 8 percent above the national average.

The state's high local tax burden is not confined to New York City, the report noted. Local taxpayers in New York City pay especially high income taxes, but residents and businesses elsewhere in the state pay unusually high property taxes, the report said.

The CBC attributed the high tax burden to four government programs:

New York State faces a major structural imbalance between spending and recurring revenues, the report said.

“Recent history of failure to confront the unsustainable expenditure base has serious future consequences,” it added.

The full report is available at: www.cbcny.org.