With a deteriorating mass transit system, despite high and rising taxes and fares, and soaring rents (and property tax revenues from renters), young workers have been leaving New York City since 2015, a trend that has accelerated since the COVID-19 pandemic. And there is talk that the wealthy will move away since they will now have to pay taxes, after not having to pay taxes in the past, according to various headlines over the past two years. From “not taxing the rich,” according to those headlines, New York is suddenly taxing the rich more than any other state. Even California.
In reality, of course, New York already taxed the rich, and everyone else, far more than any other state. And it isn’t close. As I showed here…
In FY 2017 New York State’s average state and local government tax burden was 13.8% of state residents’ personal income, compared with the U.S. average of 9.8% and 10.3% for California. If New York City were a separate state, its burden would have been 15.1% of income, and rising, compared with 12.9% on average for the rest of the state. And at that level, according to any elected officials who didn’t want to face a primary, and most of the local media, city residents deserved deteriorating public services, because they weren’t paying enough.
There is one group of people, however, who face a very different tax burden in New York, compared with other places.
Retiree David Fisher, 69, has lived in New York state since age 27. He has found that while living there was expensive while he was working, New York is much more affordable in retirement. This is primarily for three reasons: New York State doesn’t tax Social Security or retirement account distributions, the state has a program to reduce property taxes after age 65, and there’s a low cost of living in the Rochester, New York, area where he lives.
Retired public employees, like the Senior Voters in our tax analysis of three prototypical Brooklyn couples, have it even better – none of their retirement income, paid for by poorer working serfs, is taxable.Continue reading