When it comes to fairness in the New York-to-Washington tax dollar exchange, things have been looking favorably for the Empire State, a report issued Thursday by NYS Comptroller Thomas DiNapoli shows.
But just how long this good economic news will last is another question, with pandemic relief programs ended or ending, and state lawmakers at a standstill with New York’s long overdue budget.
‘Constructive dialogue’ needed: DiNapoli
Taking a deeper look at the numbers, New York state in 2022 generated $361.8 billion in federal taxes and benefited from $383 billion in federal spending. In other words, for every tax dollar sent to the feds, the state received $1.06 in return.
Of course, a lot of that money came from income taxes. On a per capita basis, individual income taxes represented the largest portion of taxes paid at $11,095, which is 41.6% higher than the national average of $7,834, according to the comptroller’s analysis. New York also ranked first on per capita corporate income taxes, which were $1,976, $701 higher than the national per capita level of $1,275.
Paying income taxes is never fun, but in addition to it being the law, it does help the state — as does federal spending.
According DiNapoli’s report, this is the third year in a row that New York has had a positive balance of payments, after a long history of sending more money to Washington than it receives.
But much of this good news is credited to the historic federal pandemic relief funds. Though being spent down, starting in 2022, it continued to boost New York’s balance of payments with Washington.
In fact, as the emergency spending abated in many programs during 2022, a handful of states excluding New York experienced a negative balance of payments, according to the report.
“The response to the dire economic conditions brought on by the pandemic boosted federal aid for New York and all other states,” DiNapoli said.
But as relief efforts continue to dwindle, it raises the question: What will happen in New York next year?
“As this relief comes to an end, New York’s balance of payments with Washington may again turn negative as federal support returns to pre-pandemic levels,” the comptroller explained. “The federal budget is an effective way to produce more equitable outcomes for all Americans, and I hope this report contributes to a constructive dialogue towards that goal.”
Spending in New York
In 2022, federal expenditures in New York were high in the categories of Medicaid, Supplemental Nutrition Assistance Program (SNAP), rental and public housing assistance and transit. Federal employee wages, salaries and retirement, veterans benefits and highways ranked lower.
While the federal return on each dollar was favorable for New York, it was still below the national average of $1.28, according to the report. Concurrently, New York generated $18,388 per capita, ranking it third in per capita contribution to the federal treasury, which was 32.4% higher than the national average of $13,888.
Meanwhile, New York’s lawmakers continue to battle out their funding plans, as negotiations for a final state budget continue. With pandemic relief money winding down, and budget talks at a standstill, it is hard to say what lies ahead economically for the state.
More information about the comptroller’s report, including a look at flow of funds between other states and the federal government, visit osc.ny.gov.
