You may have heard that New York is a high-tax state. But what does that really mean? If we concentrate solely on personal income taxes in 2019, California tops the list with the highest top rate of 13.3 percent. New York is in the ninth spot with its 8.82 percent.
- California 13.3%
- Hawaii 11%
- Oregon 9.9%
- Minnesota 9.85%
- Iowa 8.98%
- New Jersey 8.97%
- Vermont 8.95%
- District of Columbia 8.95%
- New York 8.82%
- Wisconsin 7.65%
With New York needing to raise revenue to fund public services, attention has turned to increasing the top tax rates on the state’s highest earners.
If we were to model state revenue by replacing our existing rate with those from other states, we might immediately obtain interesting results. For instance, if NYS changed its millionaires tax rate on the state’s top earners to 13.3 percent – the highest in the country – the state would be projected to obtain just over $11 billion of potential additional revenue under static modeling conditions.
While some dynamic adjustment to (or management of) liability exposure on the part of the taxpayers could in principle take place and be, in some instances, a nontrivial revenue-limiting factor. According to the research on the matter, the overall fiscal gain can be expected to vastly outweigh any such behavioral adaptations.
Personal income taxes are not the only tax expense. Looking at combined sales and income taxes, the Tax Foundation rated the five highest state-local tax states:
- New York 12.7 %
- Connecticut 12.6%
- New Jersey 12.2%
- Illinois 11.0%
- California and Wisconsin 11.0%
It’s important to remember that taxes fund all the things that make a community a great place to live – schools, parks, public services, the infrastructure. We all do our part by paying our taxes.