How Much Do Taxes Matter?
A Citizens Budget Commission Panel Discussion
New York City businesses and households face heavy tax burdens. This is not only conventional wisdom; it is also documented by a number of studies. The New York City Independent Budget Office found that New York City had the highest overall local tax effort of the 10 largest cities in the U.S.; New York City's local taxes absorbed nearly $8 of every $100 of taxable resources in 1997, about 80 percent more than the average for the next nine largest cities. The District of Columbia's nationwide comparison of family tax burdens for the largest city in each state places new York City either first or second for all households with incomes of $50,000 or more. A recent CBC study of the City's tax competitiveness found New York City had the highest state-local tax burden for hypothetical firms in all 11 industries examined in comparison to tax burdens in other competitive locations.
This background paper was prepared for a panel discussion "How Much Do Taxes Matter? New York City's Tax Burden and Economic Competitiveness." Elizabeth Roistacher, professor of economics at CUNY Queens College, summarizes the econometric literature that tries to model the relationship between tax levels and economic growth.
On December 11, 2006, the distinguished and diverse panel included Rep. Anthony Weiner, Barry Gosin, CEO of Newmark Knight Frank, City Finance Commissioner Martha Stark, Working Families Party Executive Director Dan Cantor, New York State Business Council President Ken Adams, NYC Council Finance Chair David Weprin, Council Minority Leader James Oddo, E.J. McMahon from the Empire Center, IBO Director Ronnie Lowenstein, Deputy City Comptroller Marcia Van Wagner, James Parrott of the Fiscal Policy Institute, Federal Reserve Research Officer Andrew Haughwout, and Hunter College Professor Howard Chernick.