Click here to download Jonathan Haughton’s presentation to the state Economic and Revenue Forecasting Conference.

A proposal to raise New York’s personal income tax rates on high-income households will cost the state 22,000 private-sector jobs if enacted, according to an economic analysis by the Empire Center for Public Policy.

The employment impact of the proposed tax hike was estimated using a New York version of the State Tax Analysis Modeling Program (STAMP), developed for the Empire Center by the Beacon Hill Institute at Suffolk University in Boston, Massachusetts. STAMP is a computable general equilibrium model that uses thousands of statistical variables to estimate the impact of tax rate changes on revenues and employment.

Jonathan Haughton, senior economist at Beacon Hill Institute and professor at Suffolk University, presented the model’s findings during his testimony at Monday’s state Economic and Revenue Forecasting conference in Albany. He cited the so-called “fair share” tax plan, which would boost the state’s current top rate of 6.85 percent to 8.25 percent on incomes between $250,000 and $500,000; 8.97 percent on incomes between $500,000 and $1 million; and 10.3 percent on incomes over $1 million.

“When we put the ‘fair share’ tax increases in this model, we find that (the plan) reduces private sector jobs by about 22,000,” Haughton told a forecasting panel that included the state budget director and the chairs of the Legislature’s fiscal committees.

“The fundamental problem here is that raising those taxes at the high end [is] not without an economic cost, and that economic cost is, in fact, that it will encourage people to set up elsewhere or to leave.”

“There is a substantial economic literature … on the damage that can be done by tax rates even at the top end,” Haughton said, adding that the damage grows with the size of a tax increase. The tax-hike proposal now in the Legislature would raise rates on high-income filers by 20 percent to 50 percent.

While economic indicators pointed to “the worst recession at least since 1957, and probably since the 1930s,” Haughton said, New York’s economic troubles have been compounded by the collapse of the securities industry. He identified the long-term challenge as “setting the foundations for the post-Wall Street New York economy.”

Haughton noted that New York has a mediocre ranking of 35th on the Beacon Hill Institute’s State Competitiveness Index. While the Empire State does well by some measures, it ranks 49th out of 50 in “government and fiscal policy,” including the burden of state and local taxes relative to income.

“Is this really the moment to be raising that tax burden, as the incomes of the state are set to sink substantially?” he added.

Click here to download Jonathan Haughton’s presentation to the state Economic and Revenue Forecasting Conference.

A proposal to raise New York’s personal income tax rates on high-income households will cost the state 22,000 private-sector jobs if enacted, according to an economic analysis by the Manhattan Institute’s Empire Center for Public Policy.

The employment impact of the proposed tax hike was estimated using a New York version of the State Tax Analysis Modeling Program (STAMP), developed for the Empire Center by the Beacon Hill Institute at Suffolk University in Boston, Massachusetts. STAMP is a computable general equilibrium model that uses thousands of statistical variables to estimate the impact of tax rate changes on revenues and employment.

Jonathan Haughton, senior economist at Beacon Hill Institute and professor at Suffolk University, presented the model’s findings during his testimony at Monday’s state Economic and Revenue Forecasting conference in Albany. He cited the so-called “fair share” tax plan, which would boost the state’s current top rate of 6.85 percent to 8.25 percent on incomes between $250,000 and $500,000; 8.97 percent on incomes between $500,000 and $1 million; and 10.3 percent on incomes over $1 million.

“When we put the ‘fair share’ tax increases in this model, we find that (the plan) reduces private sector jobs by about 22,000,” Haughton told a forecasting panel that included the state budget director and the chairs of the Legislature’s fiscal committees.

“The fundamental problem here is that raising those taxes at the high end [is] not without an economic cost, and that economic cost is, in fact, that it will encourage people to set up elsewhere or to leave.”

“There is a substantial economic literature … on the damage that can be done by tax rates even at the top end,” Haughton said, adding that the damage grows with the size of a tax increase. The tax-hike proposal now in the Legislature would raise rates on high-income filers by 20 percent to 50 percent.

While economic indicators pointed to “the worst recession at least since 1957, and probably since the 1930s,” Haughton said, New York’s economic troubles have been compounded by the collapse of the securities industry. He identified the long-term challenge as “setting the foundations for the post-Wall Street New York economy.”

Haughton noted that New York has a mediocre ranking of 35th on the Beacon Hill Institute’s State Competitiveness Index. While the Empire State does well by some measures, it ranks 49th out of 50 in “government and fiscal policy,” including the burden of state and local taxes relative to income.

“Is this really the moment to be raising that tax burden, as the incomes of the state are set to sink substantially?” he added.

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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.