Report: Middle Class Pays Higher Share of Income To Taxes
The union-backed Fiscal Policy Institute is promoting a national study today that claims the middle class in New York pays a slightly higher share of their income in state and local taxes than the rich.
But the report by The Institute on Taxation and Economic Policy, titled “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” found that New York was among four states – along with Delaware, Washington D.C. and Vermont—that has the least regressive tax system.
The report explains that New York and the District of Columbia have a “close-to-flat tax system overall” because it has an Earned Income Tax Credit and an income tax with “relatively high top rates.”
It notes that ten states – Washington, Florida, South Dakota, Tennessee, Texas, Illinois, Arizona,
Nevada, Pennsylvania, and Alabama – have the most regressive taxes.
Unions pushed New York earlier this year to raise income taxes on people who make more than $250,000 a year as a way to generate—what lawmakers estimated at the time—was $4 billion in new revenue for the state. But with the recession and people leaving New York, the revenue has been much lower.
Here’s the Fiscal Policy Institute’s take on New York’s standing in the report, from their press release:
– New York families earning less than $16,000 – the poorest fifth of New York non-elderly taxpayers – pay 9.6 percent of their income in New York state and local taxes. – Middle-income New York taxpayers – those earning between $33,000 and $56,000 – pay 12.0 percent of their income in New York state and local taxes. – But the richest New York taxpayers – with average incomes of $3,065,800 – pay only 9.4 percent of their income in New York state and local taxes.
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Public sector retirement income is exempt from state and local income taxes in New York, no matter how high it is, at any age. A working person will pay more even if earning the same or less.
For retired private sector workers Social Security is exempt, but other income is only exempt up to $20,000, and only after age 65.
I guess it isn’t “regressive” if the people funding you benefit from it.
And I don’t want to hear that taxes were paid on the employee pension contributions, which are close to zero in New York, particularly for older generations of government workers. The employer contributions, which are soaring, are also tax free.
Why doesn’t someone write the issue in the post below?
http://www.r8ny.com/blog/larry_littlefield/taxes_and_generational_equity_in_2008_the_latest_annual_analysis_of_the_issue_no_one_else_seems_to_want_t