As New Yorkers embark on Black Friday shopping expeditions, their purses and wallets are feeling lighter. Maybe because Governor Cuomo and Mayor Bloomberg have already taken their share.
If Mayor-elect de Blasio has his way, it will probably get worse, especially for two-earner couples. Higher taxes adversely affect married women who want to climb to the top of the career ladder.
New York residents are among the highest taxed in the country for all types of taxes. They rank first in individual income taxes paid per capita, $2,196, second in corporate income taxes, $469, sixth in sales and excise taxes, $1,783, and fifth in property taxes, $2,280. See Tax Foundation state tax climate data.
On average, it costs New York residents all their earnings from January until May 6, dubbed Tax Freedom Day, to cover their tax liability. For the United States, the average is April 18, and New Yorks date is the second latest.
According to the non-partisan Tax Foundation, which compiles tax data from federal and state sources, from 2000-2010 New York saw a net gain in the movement of adjusted gross income from only three states — Illinois, Missouri, and Michigan. The other 46 states gained from New Yorks policy of high taxes. They received a net influx of $45.6 billion dollars and almost 1.3 million people from New York.
A 2012 study by the District of Columbia government concludes that New York City ranks sixth in the nation in the average state and local tax burden for a family of three. For a family of three making $150,000 or more, New York City ranks third — after only Bridgeport, Conn. and Philadelphia. Read the study here.
During his campaign, de Blasio called for an increase in tax rates for New Yorkers earning $500,000 or more from 12.7% to 13.23%. He needs the state legislature to agree, but he wants to achieve this by raising the New York City tax from 3.86% to 4.41%. This five-year surcharge would supposedly yield $530 million in new revenue to pay for universal pre-K for all 4-year-olds and fund after-school programs for all middle school students.
For the 27,300 city taxpayers earning $500,000 to $1 million, the average increase would be $973 a year, according to the Independent Budget Office, a municipal agency. For those making $1 million to $5 million, the average extra bite would rise to $7,793, the budget office said. At incomes of $5 million to $10 million, it would climb to $33,518, and for those earning more than $10 million, it would mean paying $182,893 more.
The median New York household makes nearly 10% more than the average American one. The 2012 median national household income was $51,371, and New Yorks was $56,448. As a result, New Yorkers pay a larger share of their income as federal taxes, because the tax rate increases as income does. This carries over to progressive state and local taxes. Even if tax rates were identical, New Yorkers would pay more due to their higher incomes.
This has the biggest effect on women. New Yorks tax system makes it harder for women to work. The penalty falls most heavily on married women who have invested in education, hoping to shatter glass ceilings and compete with men for managerial jobs.
According to the Census Bureau, 71.6% of women aged 15 and over have been married at least once as of 2012. Higher marginal tax rates discourage married women from working. When single women work and are considering marriage, higher rates discourage marriage. Sometimes high tax rates contribute to women quitting the workforce altogether.
When mothers take jobs, earnings are reduced by taxes paid at their husbands higher rates, in addition to costs for childcare and her transportation. This discourages married women not just from working, but also from striving for promotions, from pursuing upwardly mobile careers.
Mothers are more affected by the marriage penalty than other women because they are more likely to move out of the labor force to look after newborn children and toddlers, and then to return to work when their children are in school.
Labor Department data show that as the average number of earners per household rise, so do income levels. One characteristic of the highest-earning one-fifth of households is that they have an average of two earners per household. The middle fifth averages 1.3 earners per household, and the lowest-earning fifth averages half an earner per household — more part-time and unemployed workers, or retirees.
When two workers marry, more households move into the top fifth of the income distribution.
Married couples are more likely to be in the top two-fifths of the income distribution. In 2012, 32.1% of married couples were in the top quintile, and 58.4% were in the top two quintiles. Out of the top 5% of earners, 81.4% are married couples. Only 7% of married-couple families were in the lowest quintile in 2012.
The majority of Americans are women. The majority of voters are women. Yet despite their political power, the state government all too often ignores, or even worse, militates against the interests of women. This is particularly true of the economic interests of women. Especially in the details of tax codes, the economic interests of women are neglected.
With high marginal tax rates, American women are shunted into higher tax brackets, discouraged from working, and given every incentive not to pursue advancement.
High taxes are destroying New Yorks tax base, sending its residents to more welcoming locales. In order to keep the Empire State the financial and cultural capital of America, New York residents need to encourage legislators in Albany to bring taxes down.
So, New Yorkers, enjoy Black Friday deals while you can. Next year you may well have even less to spend.
Original Source: http://www.marketwatch.com/story/forget-black-friday-the-tax-man-is-coming-for-you-2013-11-29