Taxes And New York's Shrinking Population
A new study shows people exited New York in droves in 2013, and while there is disagreement as to why they left, another report suggests taxes could be playing a significant role.
Matthew Lasner, Associate Professor of Urban Studies at Hunter College, theorizes about the exodus: "States like New York, including older northern and eastern cities, is a long-term trend, and if we see a recent uptick, it's probably because we saw a dip during the Great Recession."
Lasner believes tax policy and business UN-friendly polices likely play a smaller role in people's deciding to move south and west out of New York than one might be led to think - that businesses moving lead the way for relocations. "And it's a trend that goes back, even a hundred years. Many Americans sort of stopped moving altogether during the Great Recession, and it tends to happen whenever we see an economic downturn. And then when the economy picks back up, people start moving again."
Kiplinger’s has released its ranking of the most and least tax-friendly states. The list was unveiled as part of Kiplinger’s third annual Tax Map—which offers an easy-to-use visual guide that compares income tax, sales tax, gas tax, “sin” tax (for products such as alcohol and tobacco) and other tax types, rules and exemptions across all 50 states.
Millions of Americans annually move from state to state for various reasons, including seeking tax relief. Kiplinger has launched a 2015 "Tax Map" that shows New York holding down the No. 5 position on its list of 10 least tax-friendly states. Sandra Block is Senior Associate Editor at Kiplinger’s Personal Finance magazine: "Start with the state's income tax. It kicks in real early. A 4 percent income tax kicks in for a married couple at $16,450, which is a pretty low threshhold for people to start paying 4 percent on their income. And then for higher income people, it goes up to 8.8 percent for people who make more than a million. That's a lot of money. New York has one of the highest gas taxes in the country, 46 cents a gallon. And your property taxes are among the highest in the U.S. The other issue is even though the state sales tax is relatively low at 4 percent, local jurisdictions tack a lot onto that. The average combined state-local sales tax is 8.5 percent. That's the seventh highest in the country."
Connecticut and New Jersey rank second and third, respectively, on Kiplinger's list. Rhode Island, Vermont and Maine come in at numbers 6, 7 and 8. According to the Tax Foundation, people moving out of New York during the last decade took $45.6 billion in personal income from the state's economy, the most in the nation.
Lasner weighs in: "Clearly there's a long term shift in population in the U.S., to the south and to the west, away from major cities. I think it's a little bit more worrisome for upstate New York than it is for downstate, but I imagine most of the population is leaving from downstate."
But, proving Northeasterners don't have to have move thousands of miles to escape taxes, Delaware tops the list of 10 most-friendly tax states. "What makes Delaware stand out, and it has topped our list several years in a row, Delaware is a haven for corporate headquarters. And I think the state make so much money off the corporations that have their headquarters there, which is related to the friendly way that Delaware treats them, that it’s able to offer very low income taxes for residents."