Nearly two-thirds of New York State’s tax receipts are now generated by the personal income tax, or PIT. As a result, the state is very heavily reliant on highest-earning 1 percent of New York taxpayers—whose effective income tax rates have increased sharply under the new federal tax law capping state and local tax (SALT) deductions.
In light of the SALT cap and of proposals to extend or further increase the state’s so-called “millionaire tax,” this paper presents charts and tables highlighting notable trends in state PIT data. Key points with a bearing on the income tax debate include the following:
- New York’s fastest-growing group of high-income taxpayers consists of nonresidents, who have minimal exposure to the millionaire tax.
- The percentage of New York residents and New York source income among all the U.S. income millionaires declined in the first six years after the state millionaire tax was first imposed in 2009.
- The capital gains share of New York’s taxable income has rebounded to pre-recession levels, boosting the state’s reliance on the most volatile portion of the PIT base.
- The SALT deduction cap enacted as part of the federal Tax Cuts and Jobs Act will result in a higher Marginal Effective Tax Rate for the highest-earning residents of New York City.
About the Author
You may also like
More Spending, Fewer Kids: Mapping NY School Budget Proposals
New York school districts are of budgets that would raise their per-pupil spending by an average of more than four times the projected inflation rate. Most districts have proposed pro Read More
What 2019 Census data tell us about NY “places”
The final set of pre-pandemic U.S. Census population data for cities, towns and villages provides localized details on a familiar New York pattern: widespread decline upstate, and a few small pockets of growth amid the general stagnation downstate. Read More
Empire Upward
Looking ahead, state officials must begin now to take seven essential steps for promoting the recovery and renewal of New York’s economy. Read More
Charting NY’s fiscal collapse
The Cuomo administration has gotten around to sharing detailed estimates of the pandemic's impact on the state budget enacted almost a month ago—but the latest update from the Division of the Budget (DOB) raises about as many questions as it answers. Read More
Amid Covid, a shaky state budget
New York has just enacted a pandemic-crisis budget that might as well have been written in disappearing ink—shakily “balanced” on hopes of a huge federal bailout and ultimately backstopped by the potential for unprecedented deficit borrowing. Read More
NYC led latest state population drop
For a second consecutive year, New York’s population loss was mainly concentrated downstate, according to the latest Census Bureau estimates. Read More
Hooked on HCRA: New York’s 24-Year Health Tax Habit
Faced with a $2.5 billion deficit in the Medicaid budget, Governor Andrew Cuomo has floated the idea of closing the gap in part with “additional industry revenue.” This raises concern that lawmakers will again hike New York’s already heavy taxes on health insurance – and deepen the state’s addiction to an unhealthy source of revenue. Read More
Median Pay Levels in NY Schools
Staff salaries are the dominant category of spending in public school budgets across the state. And the largest item within that category is teacher salaries, which consistently rank among the highest in the country. Read More