TAX WATCH 2004

A Guide to the Key Budget Issues
Confronting New York State in the Year Ahead

• Issue #1: Taxes are Far Out of Line in New York. Will Albany Make Them Worse?
  New York State's taxes are the nation's highest—48 percent above the average for all states. This burden drives jobs to other states and hurts both employers and working families. The cure? Elected officials must start by making a firm, long-term commitment to restraining government spending.
  
  
• Issue #2: High-Growth States Are Low-Tax States. It's Time for New York to Wise Up.
  New York is losing economic ground to states that tax citizens and businesses less. Between 1992 and 2002, when private-sector jobs grew by 21.1 percent nationwide, lower-tax states, especially Florida, Georgia and Texas, grew at least one-and-a-half times as fast as the nation, while New York grew at only half the national rate.
• Issue #3: New York's Property Taxes Are Too High. Albany and Localities are Both to Blame.
  New York's per-capita property tax burden is more than $1,300 for every man, woman, and child in New York. The burden is the nation's fourth heaviest, and it is 50 percent above the national average.
  
  
• Issue #4: Corporate, Personal, Property Taxes: All Part of Heavy Tax Burden on Business. New York State businesses pay roughly one of every three tax dollars collected in New York State. That tax burden is higher than most other states'. Many businesses pay their taxes through owners' personal income tax. And businesses pay about a quarter of all sales taxes, an even higher percentage of local property taxes, and about two-thirds of the state's hidden taxes on health insurance.
  
  
• Issue #5: Personal Income Tax: The Biggest Hit on New York's Workers and the Economy. Personal income taxes in New York State are the single biggest reason New York's tax burden is uncompetitively high. New York's top personal income tax rate is much higher than the top rates in neighboring and competing states such as New Jersey (6.4 percent), Massachusetts (5.3 percent), Connecticut (4.5 percent), Michigan (4 percent), and Pennsylvania (2.8 percent).
  
  
• Issue #6: New York State's Taxes on Health Care: A Huge — And Hidden — Burden on Business. The steadily increasing cost of health insurance is driven to a significant extent by Albany's hidden taxes on health care. Employers and individuals will pay New York an estimated $1.4 billion in taxes on health insurance this year. Albany’s taxes on health insurance are also the second-biggest state tax on employers, behind only the corporate franchise tax.
  

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