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Report: New York has the highest tax burden in the nation


(The Center Square) — New Yorkers contribute the largest portion of their annual income to taxes in the nation, according to a new report by the personal finance website WalletHub.

  • By Christian Wade | The Center Square contributor
  • March 30th, 2023
  • Republished with Permission: The Roosevelt Island Daily News

  • New York state coat of arms

    The Empire State has the highest overall tax burden in the U.S., accounting for 12.47% of personal income, according to the report — 2023’s Tax Burden by State — which comes ahead of the April 18 federal income tax deadline.

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    WalletHub compared IRS data for the 50 states across the three tax types of state tax burdens — property taxes, individual income taxes and sales and excise taxes — as a share of total personal income. 

    New York has the highest individual income tax burden in the nation accounting for 4.72% of personal income, WalletHub said. 

    It also has the fifth highest burden for property taxes, which account for an estimated 4.36% of personal income, according to the report

    Maine was ranked number one for the highest property tax burden, accounting for 5.33% of personal income. Alabama was ranked the lowest, with 1.39% of personal income, the report said.

    The Empire State is less of a burden on its residents when it comes to overall sales and excise taxes, the report noted, ranking it 24th highest in the nation for those kinds of taxes, which it says account for 3.39% of personal income.

    Overall New York, and other Democratic-led “blue” states — as defined by the results of the 2020 elections — had a higher tax burden than Republican-led “red” states, the report found. 

    Besides the financial burden on individuals that high state and local taxes present, they also raise the question of how those taxes affect economic growth, the report’s authors said.

    Tax experts say states like New York with higher tax burdens are seeing a flight of individuals leaving for states with lower tax burdens. 

    “Higher tax rates lead to relocations. Both individuals and businesses tend to leave high-tax jurisdictions,” said James N. Mohs, associate professor of accounting and taxation at the University of New Haven. “The rate of relocations seems to directly correlate with tax rates and the impact of costly infrastructures. The infrastructure costs may often be indirect taxes and fees.” 

    Patrick Hopkins, an assistant professor of accounting at Texas Christian University’s Neeley School of Business, said the lingering impact of record-high inflation will continue to put pressure on local governments wrestling with increased expenditures, which could increase the burden on taxpayers. 

    “So, governments will face a choice of scaling back expenditures or increasing revenues,” he said. “Typically, increasing revenues can be achieved by expanding a tax base, changing a tax rate, or creating a new tax. In any case, the taxpayer would experience an increase in their taxes.”

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