“Bill de Blasio has offered a vision for New York that leaves no one behind,” says Chiara de Blasio in a campaign ad unveiled this week. “Who’s going to ask the wealthy to pay their fair share to fund pre-K and after-school programs?” The answer: Her father, Democrat mayoral nominee Bill de Blasio.
“All of this attention? It’s a good thing, as long as it’s not your little brother,” Chiara continues. As she rolls her eyes beneath a garland of pink roses in her hair, a video box slides in from the left side of the TV screen. Inside, is the candidate’s spectacularly named son, Dante de Blasio. It’s tough to miss Dante’s foot-high Afro. It appears to be on loan — via time machine — from either the Jackson 5 or 1960s radical Angela Davis.
This commercial is simultaneously cute and maddening.
While the playful sibling rivalry is somewhat endearing, the ad reinforces the fundamental mythology that fuels de Blasio’s campaign: The filthy rich refuse to pay what they should in taxes, and must be shaken down to benefit poorer New Yorkers, whom these dandies have stiffed.
It’s a truly touching narrative — worthy of Charles Dickens or perhaps Karl Marx.
Fortunately, hard data debunk de Blasio’s central thesis.
Manhattan Institute scholar E.J. McMahon dissected New York City’s tax structure in a City Journal article whose headline last summer encapsulated the plight of New York’s top taxpayers: “Overburdened.”
“No city in America can match New York’s broad array of taxes — more typical of a state than of a municipal government,” McMahon wrote. “Such high taxes are a headwind against economic growth: they add to overhead, cut into profits, and make it costlier to employ people.” He added, “New York is at a more pronounced competitive disadvantage with cities that don’t squeeze their citizens as tightly.”
While de Blasio argues that the wealthy refuse to pay their fair share, McMahon’s presentation of Independent Budget Office statistics demonstrates that top earners already deliver nearly all of New York City’s income tax.
The latest available numbers show that in 2009, the top 1 percent of New York City’s tax filers earned at least $493,439. That year, they paid 43.2 percent of local-income tax revenue.
The top 10 percent — who produced at or above $105,368 — yielded 71.2 percent of Gotham’s income-tax proceeds. (The IBO notes that this cohort scored 58.2 percent of personal income — less than its share of taxes. Is that fair?)
The top 20 percent, who generated $68,146 or more, surrendered a whopping 84 percent of income-tax collections.
City Journal graphic by Alberto Mena.
And the bottom 60 percent, who made $37,671 or less, paid just 2.8 percent of local income taxes, compared with 97.3 percent handed over by the top 40 percent of tax filers. (Due to rounding, these figures total 100.1 percent.)
Indeed, the bottom two quintiles ($0 to $9,071; and $9,072 to $20,554) paid minus 1 percent and minus 0.7 percent respectively, once refundable tax credits were subtracted from their small tax payments.
New Yorkers are so accustomed to paying high local taxes that they likely assume that all taxpayers do so. In fact, the Big Apple is one of the few cities that takes a bite out of its residents’ incomes.
Top earners here face a local tax rate of 3.88 percent atop an 8.82 percent state income tax. As McMahon notes, “Together, those two rates yield a combined marginal rate of 12.7 percent on top earners — the country’s second-highest, after California’s 13.3 percent rate, and by far the highest in the Northeast.”
The income tax load is lighter in Philadelphia, where a slightly higher local income tax of 3.93 percent rides on a much lower 3.07 percent state tax. (Combined rate: 7.0 percent.) In addition to being stuck with the Red Sox, Bostonians pay a 5.25 percent state tax, but 0.0 percent local income tax. (The latter is meager compensation for enduring the hairiest, most unwashed team in the history of athletics.)
Self-employed New Yorkers with incomes above $100,000 also must pay an unincorporated business tax of 4 percent. As McMahon explained, “For New York residents subject to it — including many lawyers, medical specialists, and partners in unincorporated hedge funds and private equity firms — the UBT can effectively raise the marginal state and local income-tax rate to 15.8 percent, easily the nation’s highest.”
So, a self-employed New Yorker in the top 1 percent could make $493,439 and then pay the top 39.6 percent federal tax, (after deductions) the 6.2 percent federal self-employment tax, the 1.45 percent Medicare tax, Obamacare’s new 0.9 percent Medicare-tax surcharge on high earners, plus the 15.8 percent state and local taxes described above. These taxes total 63.95 percent of each extra dollar of income flying out of the pockets of wealthy New Yorkers and landing in Washington, D.C., Albany, and New York’s City Hall. Government allows these people to keep 36.05 cents of each marginal dollar they earn.
And yet they do not pay their fair share?
In the NYC Voter Guide, Bill de Blasio states, “I am the only candidate who has a plan to create universal early education and after-school programs by asking the wealthiest to pay a little more in taxes.”
Naturally, when de Blasio says, “ask,” he means “tell,” whereupon many of New York City’s most prosperous citizens will ask, “How soon can I move to Florida?”
Let’s hope Republican mayoral nominee Joe Lhota can overcome long odds and stop de Blasio from “asking” Gotham’s exhausted taxpayers for even more.