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Steven Malanga
For most Americans, tax freedom day has been extending later and later into the year, thanks to tax increases and to the 1990s’ booming economy, which pushed more people into higher tax brackets. This year, Americans will have to work an average of 117 days to pay off their tax bill—longer than they will have to work to pay for food, clothing, and shelter combined. A decade ago, Americans paid off their tax bill eight days earlier. The federal tax bill has grown especially rapidly for the wealthiest Americans. Those with incomes in the top 5 percent nationwide paid 55.5 percent of all federal income tax in 1999, the last year for which statistics are available, up from 44 percent ten years earlier, according to the Tax Foundation. The top 1 percent paid 36.2 percent of all taxes, up from 25.2 percent in 1989. Residents of the Empire State get hit harder than most Americans. When you add state and local taxes to the tax freedom equation, only residents of Connecticut and Washington wait longer for tax freedom. Moreover, the tax burden in New York State falls even more disproportionately on those in higher income brackets than in the nation as a whole, because the country’s progressive tax code hits New Yorkers, with their higher than average incomes, much harder than residents of most states. IRS data show that the top 5 percent of wage earners in New York State paid a whopping 58.2 percent of all federal taxes collected in the state. The Tax Foundation hasn’t calculated tax freedom day for residents of New York City, but with the city’s additional income tax on top of the state levy, tax freedom day falls even later in Gotham than in the rest of New York State. Despite that burden, many of the city’s elected representatives seem to think that New Yorkers still aren’t paying enough in taxes. One component of the new city budget proposed by the City Council is nearly $400 million in new personal income taxes, designed to fall disproportionately on those earning $150,000 a year or more—about 3 percent of the taxpaying public. They would pay $350 million, or 88 percent, of the tax hike under the City Council plan. Mayor Bloomberg is right to resist this tax hike. New Yorkers, especially those earning more than $150,000 a year, already pay the highest personal income taxes in the country. Many people who fall into this income bracket can hardly be considered rich, especially in a city as expensive as New York. Taxing them even more heavily drains money out of the private economy just when New York needs it to spur an economic revival, and higher taxes are likely to drive more of these families out of the city to escape its tax burden. That sends exactly the wrong message for a city trying to rebuild confidence in its economy.
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