New Yorkers face highest state, local tax burden, study says

New Yorkers face the highest state and local tax burden of residents in any state, according to a new study by a tax watchdog group.

The findings are based on statistics from the 2012 fiscal year and were compiled by the Tax Foundation, a nonpartisan research group based in Washington.

During that year, New Yorkers paid 12.7 percent of their combined personal income in state and local taxes, including school taxes.

Foundation economist Nicole Kaeding said that while the ratio is based on personal income, the taxes in the study included a vast variety such as corporate, business and capital gains — all key elements of the New York economy — as well as estate taxes and costs like vehicle registration fees.

“Historically, New York has been one of the highest taxes states, generally in the top three for many years,” said Kaeding.

Gov. Andrew M. Cuomo’s press office issued a statement that said, “Governor Cuomo instituted reforms that led to the lowest middle class tax rates in more than 60 years, the lowest manufacturing tax rate since 1917, the lowest corporate tax rate since 1968, a property tax cap, freeze and cut, and — as proposed this year — lower taxes for more than 1 million small businesses. Due to the age of the data in this report, much of this progress is not reflected.”

On average, taxpayers pay the most in taxes to their own state and local governments, as opposed to other states’ governments. In 2012, 78 percent of taxes collected were paid within the state of residence, up from 73 percent in 2011, the report said.

In New York, the tax burden amounts to $5,588 per capita paid within New York state and $1,406 to other states, such as when shopping or vacationing across state borders.

A little good news: During the 2012 fiscal year, state-local tax burdens as a share of state incomes decreased on average across the U.S., the foundation said. Average income increased at a faster rate than tax collections, driving down state-local tax burdens on average.

In New York, researcher Tammy Gamerman at the Citizens Budget Commission, a watchdog group, says it’s important to note that caps on property tax increases were enacted in New York in 2012. “That has significantly slowed the growth in property taxes.”

She added, “I think it’s possible that in the next few years our ranking [in the Tax Foundation study] could drop.”

She said the state’s high tax burden is largely from property taxes, the biggest components of which are for schools. “Our higher costs are largely a product of having higher salaries for all public service workers as well as higher fringe benefits — retirement benefits, health care and the like,” she said.

In neighboring Connecticut and New Jersey, their tax burdens are 12.6 percent and 12.2 percent, respectively, close to New York’s rate.

The study found Alaska to have the lowest state and local burden of the 50 states — 6.5 percent. South Dakota ranked 49th with a roughly 7.1 percent burden. In Wyoming, ranked at 48, the burden is also roughly 7.1 percent.

South Carolina’s tax burden is 8.4 percent of total combined incomes, ranking it 20th on the list and still below the U.S. average of 9.9 percent.