Empire Center Releases report advocating New York State cut taxes to stop loss of population

The Empire Center, a not-for-profit, non-partisan, Albany think tank,  released its 2018 edition of “Checklist for Change,” a summary of reforms “needed to promote renewed economic growth and competitiveness in New York State.”

The report is a checklist, focusing on reforms aimed at reducing the state’s cost burdens and improving its climate for growth.

“New York, with its high tax burden, has fallen behind national economic trends, losing millions of residents to other states over the last decade,” the Report states.

New York lost 190,508 residents to other states during the year ending July 1, 2017.

 New York has led the nation in net domestic out-migration since 2010, losing more than 1 million people.

New York has been a net domestic migration loser for more than 50 years.


The suggested reforms focus on six priorities.

Keep cutting taxes

Curb health care costs

Control public employee compensation

Reduce the job creation toll

Adopt pro-growth energy policies

Streamline state development regulations


Here are a few details from the report:

New York imposes one of the nation’s heaviest tax burdens on its residents and businesses, adding to the cost of living, working and creating jobs in the Empire State. A more competitive and efficient tax code is essential.

New York State’s highest personal income tax rate was set at 6.85 percent. As of 2017, the median top rate for states with income taxes was 6 percent, and 15 states had rates higher than 6.85 percent.

Since 2009,  New York imposed a surtax on filers with incomes starting at $1 million. The  “millionaire tax” rate is 8.82 percent. This ranked 7th highest among all statewide income tax rates as of 2017.

New York City residents pay an added local income tax that raises their combined top rate to 12.7 percent, exceeded only by California’s 13.3 percent.

“By imposing one of the nation’s highest rates on top earners, New York makes itself less attractive to high-income economic decision-makers and investors,” the Report states.



Adjust personal income tax brackets for inflation

In 2016, Governor Cuomo and the Legislature agreed on an eight-year, phased-in reduction of personal income taxes, which will affect those earning up to $321,040.  However, the PIT cuts has one glaring lapse: it does not adjust for inflation.

“Without indexing, taxpayers inevitably will experience “bracket creep,” paying higher rates even if their income is not rising in real, inflation-adjusted terms,”. The Report says

Make the property tax cap permanent

New York’s property taxes are exceptionally high.  As of 2010, measuring property taxes as a percentage of home value, 15 of the 20 most heavily taxed counties in America were in upstate New York, according to the Tax Foundation.

Property taxes in most New York counties were two to three times the national median.


Roll back health insurance taxes and excessive provider subsidies

New York’s per capita health care spending, as of 2014, was 22 percent above the national average, higher than all but six states.

New York’s per-enrollee Medicaid spending was 44 percent above the national average, ranking fourth.

New York’s average health care premium for employer-provided health insurance coverage was second highest of any state as of 2015.

New York’s high spending is not matched by high quality. The average grade for New York hospitals in Hospital Compare, a federal report card, was the lowest among the 50 states as of December 2017.

New York has the highest-in-the-nation taxes on health care.

The state should tighten the “global cap” on state Medicaid spending to ensure that New York’s per-patient spending moves closer to national norms.

Repeal the Triborough Amendment’s longevity pay guarantee

Personnel costs are the single largest spending category for New York’s municipalities and school districts.

Management’s efforts to control wages, salaries, benefits and staffing levels of government employees are restricted by the state Public Employees Fair Employment Act, better known as the Taylor Law.

New York has the nation’s most heavily unionized state and local government workforce, with nearly three-quarters of New York’s public employees covered by union contracts.  The Taylor Law tilts collective bargaining in unions’ favor—making it harder to negotiate fair deals that serve the interests of taxpayers and the general public.

In 1982, labor unions successfully lobbied for an amendment to the Taylor Law to require that all provisions of a public employee collective bargaining agreement—including automatic annual pay increases—must remain in effect even after a deal has expired. That law, better known as the Triborough Amendment gives public employees an incentive to hold out when management is seeking contract concessions.

The requirement to finance automatic pay increases has undermined attempts to stretch taxpayer dollars further in a time of financial stress.

Repeal of the amendment would establish a more equitable collective bargaining system in New York’s public sector, giving local officials the tools they now lack to negotiate needed changes to costly and outmoded contracts.

Cap binding arbitration awards to police and firefighter unions

When their contract talks reach an impasse, police and firefighter unions in New York State are entitled to unilaterally seek binding “interest arbitration,” a form of dispute resolution not available to other public employees.

The secretive arbitration process favors unions, resulting in unaffordable salary increases.  Average police and fire salaries typically exceed $100,000.

Pay is only part of the picture.

Aside from pension contributions, health insurance premiums have been the fastest growing component of compensation for police officers and firefighters. The arbitration process discourages restructuring of health insurance or other benefits.

Require health insurance contributions from public employees

Requiring all public employees to contribute to their health insurance premiums, would reduce most municipalities’ costs and give employees and unions a stake in controlling overall health insurance costs.

Enact needed pension reforms

The vast majority of public employees in New York belong to pension plans which guarantee a fixed income based on years of service and peak career salary.  Benefits are better than private-sector standards, typically amounting to 50 percent or more of peak wages and salaries.

Public pension costs in New York have increased sharply over the past decade—adding to state, municipal and school budgets.

Between 2005 and 2015, taxpayer-funded annual contributions to the New York State Teachers’ Retirement System (NYSTRS) and the New York State and Local Retirement System (NYSLRS) more than doubled, from $3.7 billion to $8.4 billion.

The pension costs crowded out funding of essential public services throughout New York State.

In light of these problems, the state as a starting point should:

End guaranteed pensions and retiree health coverage for elected officials.  Most state and local elected officials are members of the traditional pension system. This gives politicians a vested interest in preserving the status quo—and in clinging to government employment as a way to build credited pension time.

Create all-new retirement plans for the long run

Reduce the job creation toll

Between 2013 and 2016, New York boosted its statewide minimum wage by 24 percent, from the federal level of $7.25 to $9 per hour—which, adjusting for inflation, was the State’s highest minimum wage in 37 years.

New York’s minimum will rise by another 39 to 67 percent, to as high as $15 per hour downstate and $12.50 upstate.

Advocates of higher minimum wages say it’s a way of putting billions of dollars into the economy by increasing the buying power of low-wage workers. But any policy imposing higher labor costs creates a set of economic trade-offs and risks.

Employers, to pay higher minimum wages, and stay in business, can raise prices, reduce their net income, cut capital investment or hire fewer workers.

By 2022, New York’s scheduled minimum wage increase will have cost the state at least 159,000 jobs, according to a study by the Empire Center and American Action Forum. The study found the loss of job opportunities will mostly affect marginal, low-skill workers.

The solution: Suspend further minimum wage hikes and consider raising State Earned Income Tax Credit, targeted to low-wage workers supporting families.

Reform the workers’ compensation system

All 50 states have workers’ compensation programs—but New York’s consistently has ranked among the costliest in the nation.

As of 2016, New York ranked third highest, with premium costs 54 percent above the median for all states.

Priority reforms include the following: Reset the Maximum Weekly Benefit.

Adopt pro-growth energy policies

New York residents and businesses pay some of the highest electricity rates in the country.

The state Public Service Commission (PSC), created in 1907 to regulate utility monopolies, has since the 1990s expanded its own powers to levy surcharges on electricity customers and then spend the proceeds as its five commissioners, appointed by the governor, deem fit.

The PSC shouldn’t be interfering with the price of electricity.

Instead of implementing environmental or economic policy, the PSC should be focused first on the reliability of the state’s electrical grid.

The PSC should address long-standing transmission issues to improve the flow of electricity, with a special eye to encouraging transmission projects that do not require the seizure of private property.