inverted-houseofcards-150x150-6870935The highest earning 1 percent of New York City residents generated 43 percent of city income taxes and 51 percent of the New York State income taxes collected from individuals  living in the city as of 2016, according to newly released data from the Independent Budget Office (IBO).

The IBO’s latest tax liability estimates highlight once again New York’s heavy dependence on the top 1 percent, for which the income cut point as of 2016 was $713,706.

As shown below, the highest-earning 1 percent of New Yorkers paid more city and state income taxes than the lowest-earning 90 percent—combined.

screen-shot-2018-10-15-at-12-34-58-pm-7300971

However, the IBO data for previous years dating back to 2006  also indicate that the share of city and state income taxes paid by the top 1 percent has decreased since 2007 pre-recession peak, when the top 1 percent paid 58 percent of both the city and state income tax. The high-earner share has decreased primarily because the total incomes reported by the wealthiest New Yorkers have risen at a slower rate than those of lower income groups.

In fact, as of 2016, the IBO data show the combined adjusted gross income (AGI) for New York City’s top 1 percent was down 12.5 percent from the previous year. This was the first year-to-year income decline in the top-earner category since 2013, itself an atypical year in which many wealthy households nationwide accelerated income into 2012 in anticipated of higher federal income tax rates.

Prior to that, the most recent decrease in AGI for high earners came during the Great Recession in 2007-09, when incomes within the top 1 percent plummeted nearly $54 billion, or 40 percent. As of 2016, the total AGI of the city’s top 1 percent remained $20 billion, or 15 percent, below the 2007 pre-recession peak.

As of 2016, files in the top 1 percent had average city income tax liability of $107,000, compared to a average $545 for New Yorkers whose earnings put them in the middle quintile of all city residents. Or, to look at it another way, an average high-income city resident paid  as much city income tax as 196 median-income New Yorkers.

The top of the top

Within the highest-earning 1 percent as of 2016 was an even more rarified contingent of roughly 3,500 city residents with incomes of $5 million or more, who made up the highest-earning 10 percent of the top 1 percent.

These filers earned about 19 percent of total AGI, while generating 23 percent of New York City income taxes and 28 percent of all the state income tax paid by city residents.  On average, taxpayers in this income category generated $599,000 in city income taxes, and $1.3 million in state income taxes.

In other words, if just 100 New Yorkers in this super-high income category picked up and move to another state, the income tax loss alone would come to $60 million for the city and $130 million for the state.

For a broader look at New York State’s dependence on higher earners, see our April paper, “Exploring NY’s Top-Heavy Tax Base.”

 

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Despite Lingering Shortages, New York’s Health-Care Workforce Is Bigger Than Ever

The state's health-care workforce is recovering unevenly from the pandemic, with persistently lower employment levels in some areas and robust growth in others. This mixed pattern c Read More

High Taxes Aren’t a Problem, Supporters of High Taxes Say

A declaring "no statistically significant evidence of tax migration in New York" and finding "high earners’ migration rates returned to pre-Covid levels" during 2022 has a glaring problem: It relies heavily on an almost microscopic sample size of self- Read More

The Wacky Math of New York’s Essential Plan

Thanks to an absurdly wasteful federal law, New York's Essential Plan is expected to continue running billion-dollar surpluses even as state officials more than double its spending over the next several years. Read More

NY 2nd in the Nation for Homeschooling Growth

A Washington Post analysis of homeschooling trends revealed that families in New York have flocked to home education at rates Read More

Don’t Tell The Grownups: NY Still Hiding State Test Scores

State education officials are refusing to release the results of federally required assessments in grades 3 through 8, deliberately keeping parents and taxpayers in the dark—not only about how New York’s public schools performed, but also about how that performance was measured. Read More

In a Tight Budget Year, New York’s Hospital Lobby Shoots for the Moon

As Governor Hochul calls for spending restraint next year, influential hospital lobbyists are pushing what could be the costliest budget request ever floated in Albany. In a , the G Read More

What You Should Know: NY’s changing graduation requirements

Months after lowering the scores to pass state assessment exams, New York education officials are considering eliminating the Regents diploma. Read More

Putting the Mission in Hochul’s Health Commission

Last week Governor Hochul answered one big question about her Commission on the Future of Health Care – the names of its members – but left a fundamental mystery unresolved:  W Read More

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!