Tax Principles, Volatility, and S.2021 and S.2654 Slides to - - PowerPoint PPT Presentation

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Tax Principles, Volatility, and S.2021 and S.2654 Slides to accompany testimony Albany, NY March 12, 2009 Donald J. Boyd, Senior Fellow Nelson A. Rockefeller Institute of Government Richard P. Nathan and Thomas L. Gais, Co-Directors Robert

SLIDE 1

Tax Principles, Volatility, and S.2021 and S.2654

Slides to accompany testimony

Albany, NY March 12, 2009

Donald J. Boyd, Senior Fellow

Nelson A. Rockefeller Institute of Government Richard P. Nathan and Thomas L. Gais, Co-Directors Robert Ward, Deputy Director boydd@rockinst.org

SLIDE 2

Competing tax policy goals

Taxpayer equity or “fairness” – horizontal

and vertical

Tax neutrality
Revenue adequacy – longer run, and

cyclical

Administration and compliance

SLIDE 3

New York's economic volatility - perhaps surprisingly - is not atypical

State economic volatility, 1986-2005 (AK excluded as extreme outlier: value=10.1)

AL AR AZ CA CO CT DE FL GA HI IA ID IL IN KS KY LA MA MD ME MI MN MO MS MT NC ND NE NH NJ NM NV NY OH OK OR PA RI SC SD TN TX US UT VA VT WA WI WV WY

1 2 3 4 5 5 10 15 20 25 30 35 40 45 50 Rank (1=least volatile) Economic volatility: "typical" % change in real gross product adjusted for trend (standard deviation)

Source: Author's analysis of data from U.S. Bureau of Economic Analysis

SLIDE 4

Excelsior! New York's rising reliance on the financial sector

Finance and insurance wages as a share of total wages in New York State

0% 5% 10% 15% 20% 25% 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Source: Bureau of Economic Analysis data, spliced by Boyd

SLIDE 5

The top 0.5% of tax returns have an estimated 23% of AGI and 31% of tax liability

Estimated distribution of NY tax returns, adjusted gross income, and tax liability in 2009

10 20 30 40 50 60 70 80 $0-50k $50-100k $100-200k $200k to $1 million $1 million + % share of total # tax returns AGI Tax liability

Source: NYS Executive Budget 2009-10, Economic and Revenue Outlook, Table 6, p.200

SLIDE 6

Top 1% of NY income tax returns historically have paid 30-40% of total

Tax liability of top 1% of NY income tax returns As percent of total income tax liability

30.2 33.7 35.0 35.6 39.0 35.1 32.2 36.0 37.3 38.9 39.0 40.8 36.5 35.2 36.1 5 10 15 20 25 30 35 40 45 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007* 2008* 2009* 2010* % of total

Surcharge years 1%

Source: NYS Executive Budget 2009-10, Economic and Revenue Outlook, Table 7, p.200

SLIDE 7

Concluding remarks

S.2021 and S.2654 would increase the

share paid by the top 1% significantly – perhaps by 5+ percentage points for S.2021

This certainly will increase volatility of NYS