The Big Apple Bite

As someone who used to live in New York City and now lives in Dallas, I am not surprised that the former ranks first and the latter last in a recent analysis of tax burdens in the nine U.S. cities with populations exceeeding 1 million. But I am surprised by the magnitude of the difference: New Yorkers pay, on average, $9.02 per $100 of gross taxable resources, while Dallasites (Dallasians?) pay $5.20. (I was also surprised that only nine U.S. cities have populations over 1 million, but that's another story.) The numbers include state and local income, property, and sales taxes.

The full text of the analysis, prepared by the New York City Independent Budget Office, is available here.

Comments

[Dave W.]

Yup, that is what public transit will do.

When they clampdown on cars, expect Dallas property values to shrink apace while NYC holds steady.

Hope you are renting, and not mortgaging, Big J.!

Subways cost more to build than fix.

I remember what a bitch Greenville was going north in the morning and watching the southbound lanes. The bus lanes and light rail will only make that worse, believe you me.

[Rick Barton]

I was also surprised that only nine U.S. cities have populations over 1 million, but that's another story.)

But that's just within city boundaries.

[JimmyDaGeek]

I don't claim to know too much, but doesn't New York heavily tax cigarettes? That in itself could be a major contribution to the large gap.

[Rick Barton]

Of course, for computation of taxes, that's salient.

[joe]

Dave W.,

The rankings of Chicago and San Antonio would seem to disprove the public transit thesis.

[steveintheknow]

This is why I think we should scrap the Federal Income Tax, and have the Feds collect their cash directly from the states. Citizens will only pay income and sales taxes to their state.

Then some states can have their progressive tax, and other places can have their limited one, and we can see who wins the competition. Kind of like in Switzerland.

[JimmyDaGeek]

http://www.taxadmin.org/FTA/rate/cigarett.html

Cigarette Taxes per state...also see print on bottom concerning city taxes...

[Dave W.]

Well, there are other variables. Canals can be as expensive as subways. And isn't Chicago's system subsidized by royalties from the first Newhart show? Now those were opening credits!

[JDG]

http://www.taxadmin.org/fta/rate/04stlrev.html

http://www.taxadmin.org/fta/rate/04stl_pi.html

Just more tax figures from '04

[R C Dean]

That's surprising about Dallas, because the property taxes here are absolutely savage.

I moved to Dallas from the supposed "tax hell" of Madison Wisconsin three years ago. My total state/local tax burden (property, income, and sales) only went down a little bit.

While Texas doesn't have an income tax, it has a very high sales tax (over 8%), and for a variety of very bad reasons Dallas property taxes are shockingly high. As a result, my sales and property tax outlays are way up over Wisconsin, almost eating up what I save in not having to pay state income tax.

[lunchstealer]

The proper collective term for people in Dallas is "Poor Dallas bastards". Interestingly, the term for people living in the city of Highland Park is "Rich Dallas bastards".

[Dave W.]

from the supposed "tax hell" of Madison Wisconsin

You in Madison?! Now that's funny.

[MP]

I'm surprised that even R C Dean got blindsided by focusing too much on core taxes vs. overall tax burden. NH is loaded with whiners who constantly complain about how high their property taxes are. If they would only clue in to the fact that their aggregate state/local tax burden is the 2nd lowest in the nation, maybe they would finally STFU.

[Legate Damar]

As someone who used to live smack dab in between San Francisco (10th largest city) and San Jose (11th), I knew there were only 9 cities of 1M+. And while 8 of them are no surprise to me, the fact that San Antonio is on that list truly surprises me. They must own ALL their own suburbs, because aren't they like the 22nd biggest TV market or something like that?

[Timothy]

The rest of the population in Texas tends to refer to residents of Dallas as "those uppity motherfuckers."

[JD]

No surprise to those of us in NYC. There's something like a 25% tax on hotels (apart from normal 8%+ sales tax) and an 18.mumble% tax on parking.

[JN]

City folks is so stoopid.

[joe]

Legate,

That's the way it is in Texas.

If Houston's City Hall was plopped down on Boston's City's Hall, the borders of Houston would extend over Worcester, Providence, and Lowell. There are entire incorporated cities in Massachusetts that would not even be considered a neighborhood in Houston.

Boston proper has a population of less than 600,000, but the Boston media market is, IIRC, #6.

[clone12]

Your after-muni-tax income is still higher in NY than Dallas.

While this ignores the higher cost of living in NY, obviously enough people are willing to make this tradeoff to live there.

http://www.bea.gov/regional

2004 per capita income
NY $43,277
Dallas $35,502

After tax income (Per Capita Income*(1-muni tax))
NY $39,371
Dallas $33,655

As for the Dave W's notion that a car tax will push down housing prices in Dallas, I highly doubt that it will depress the housing price any more than the 2.5-3.0% muni-property tax already assessed on Dallas houses[1], compared to the 0.5-0.9% property tax rate in NYC[2]

[1]http://www.davedowns.com/propertytaxes.htm
[2]http://www.baruch.cuny.edu/spa/images/pdf/George_Sweeting.pdf

[Warren]

That's incredible. Imagine seven million people all wanting to live together. Yeah, New York must be the friendliest place on earth.

Mick Dundee

[ChrisO]

And while 8 of them are no surprise to me, the fact that San Antonio is on that list truly surprises me. They must own ALL their own suburbs, because aren't they like the 22nd biggest TV market or something like that?

That's correct. The City of San Antonio extends to almost the entire metropolitan area. There are a couple of incorporated inner suburbs (Alamo Heights), as well as some incorporated cities on the periphery that were formerly unconnected rural towns, but SA itself is very aggressive about annexing outlying territory--much more so than either Houston or Dallas, which are surrounded by separately incorporated suburbs.

To me, metropolitan areas are the only relevant statistical categories, as opposed to incorporated cities. I always get amused at how D.C. residents make a big snit about living in D.C. and not Md. or Va., when it's all really one big urban agglommeration. Same is true with So. Cal. and the Bay Area.

[Dan T.]

To really get a good perspective on this data, wouldn't we need to know the corresponding average income for people in those cities?

My thinking is that the fact that NYC is a very in-demand place to live illustrates that people will often rather pay high taxes on a lot of income than low taxes on a small amount.

[ChrisO]

BTW, the size of a "media market" is not synonymous with the size of the metro area. Houston is a substantially more populous metro area than Boston, but Boston's media market is bigger because it covers a large part of New England that is not part of metro Boston. A better example is to compare Portland, Ore. and San Antonio. The metro areas are nearly identical in population, but the Portland media market is much bigger because it covers most of Oregon and southern Washington, where SA's media market is smaller because it is hemmed in by the Austin media market to the north and the expansive Houston media market to the east.

[Dave W.]

As for the Dave W's notion that a car tax

Oh, I am not talking about a car tax. that will never amount to enough to get dallas drivers out of their cars.

I am thinking more along the lines of this kind of thing:

http://www.citynews.ca/news/news_8025.aspx

[Lost_In_Translation]

Houston is about as agressive as it comes to swallowing up tax bases around it. Eventually, if the price was right, it'd takeover all of Harris County. The only reason its failed in its attempt to take the woodlands was that the county The Woodlands was in complained to the state that Houston (a city) was superceding the boundaries set by the state. The Houston city council is a hungry beast that constantly wants more taxes.

[D.A. Ridgely]

lunchstealer, I think you'd find most of those rich Dallas bastards living in Preston Hollow, not Highland Park, though Highland Park and University Park aren't exactly ghettos, either.

Speaking as another recently transplanted Dallas resident, I haven't made up my mind about such matters as taxes yet, but it's been sunny and in the high 70s here for the last few days, which sure beats NYC or, in my case, Washington D.C. in February. Atypical, yes, but I'll take it while it's here. (Pre-emptively, I like hot summers, too.)

[R C Dean]

I'm surprised that even R C Dean got blindsided by focusing too much on core taxes vs. overall tax burden.

All I can measure is my direct tax burden - total of state/local income/property/sales taxes.

And I can tell you it is only a little lower in Texas than it was in Wisconsin.

[R C Dean]

You in Madison?! Now that's funny.

A lot of the Madisonians thought so, too.

[JSF]

How the hell does Dallas (and we tend to refer to them as "snobby bastards") have a much lower state tax level than San Antonio?

Local taxes are different, sure, but the state tax rate is only assessed on sales and it is uniform. Cities can add to the sales tax rate but this is a local tax. The state doesn't have a property tax.

If it due to the business tax (a number of industries and business formations have been exempt), that is a highly misleading comparison as the rates are the same just the applicability varies. Plus, it is changing shortly to a more uniformly applied business activity tax.

JSF

[steveintheknow]

-JSF

Pleasant Grove brought the average down. 🙂

[jiddy]

Well, given that it is not even being considered in car adverse spots like New York, it should only be about a hundred years before it hits Dallas.

[joe]

Chris O,

That's not quite true. Boston's media market is hemmed in by those of Providence, Manchester and Springfield (Springfield/Hartford?), which are counted as distinct markets.

[grylliade]

I was also surprised that only nine U.S. cities have populations over 1 million, but that's another story.

As others have pointed out, that's just within the formal boundaries of the city. If you go by Metropolitan Statistical Area (an imperfect but better measure), there are fifty cities with a population of over a million (Salt Lake City is the smallest). And that's not even counting subsections within the largest cities, like Santa Ana-Irvine within the LA metro area, which has a population of almost three million by itself.

Since San Antonio is the 29th largest city by MSA, I'd say that it definitely includes almost all its suburbs. 🙂

(Source.)

[Matt L]

MP,

Those NH whiners should STFU. Maine leads the nation in state & local tax burden. Number one since 1997!

http://www.taxfoundation.org/taxdata/show/458.html

Dirigo indeed.

[Timothy]

It's nice to know that Maine can be best at something.

[VM]

http://www.truckads.com/Affiliate/Boston.htm#map

[ChrisO]

That's not quite true. Boston's media market is hemmed in by those of Providence, Manchester and Springfield (Springfield/Hartford?), which are counted as distinct markets.

True, but those are pretty small potatos. Boston's media market covers a huge territory. D.C.'s media market does the same, reaching all the way out to West Virginia and parts of southern Pa., even though there are sort of "sub-markets" within that larger market.

Houston is probably not a good comparison, because it has an unusually small media market for being one of the largest metro areas in the country. I used to work at a media consulting company that had maps of the media markets, but I don't remember all the details now.

[joe]

Great link, grylliade!

Clicking on the names of the MSAs brings up a map which really shows the problem with deciding what area to define as "belonging to" the core city.

[joe]

Map of Designated Media Areas:

http://en.wikipedia.org/wiki/List_of_television_stations_in_North_America_by_media_market

[T]

JSF,

That's the same question I had. San Antonio has a higher state tax level than Houston, which in turn has a higher rate than Dallas? WTF? I obviously don't get their methodology, but that shouldn't happen given the Texas tax structure. It makes me wonder about the validity of the rest of their math.

[clone12]

Dave W,

My sense is that congestion tax also probably wouldn't do a whole lot to housing prices in Dallas relative to the 2-3% property tax.

[dave W.]

Well, given that it is not even being considered in car adverse spots like New York, it should only be about a hundred years before it hits Dallas.

No, those kinds of tolls will be imposed on Texas generally, and Dallas particularly, when the car clampdown comes. And what I am saying is that Dallas has (lack of) infrastructure such that it will be less prepared than other cities when the clampdown comes.

The cities that get the cars off the road "voluntarily" and early will be the big winners in the long run (eg, when Big J. goes to sell his house).

[Legate Damar]

Thanks for all the links, guys. Neat stuff. It would have helped me refine my "the NBA officiating throws games to larger markets/cities" theory back when I cared enough to make the argument. Now I just ignore the league, like 85% of America.

[Lamar]

How about a trust-fund baby tax? It would work like a capital gains tax, but would only be assessed if you've done nothing in your life to merit an actual income. Sure, parents should be able to give their kids whatever they want, but this would give them an incentive to raise kids who might end up somehow contributing to the world. Losing the trustfunders would lower the housing market and put the tax burden not on those who are most or least able to pay, but on those who are annoying and kind of suck. Jes kiddin.

[creech]

I see Philly is runner up as usual. We need one more star player, or one less fumble, or one more strikeout, or...or....

[AC]

It scares me that the Phoenix metro is number 14. The metro area is 80 miles from east to west and 35 miles from north to south. Just how big are number 1-13?

[shockcorridor]

"I see Philly is runner up as usual. We need one more star player, or one less fumble, or one more strikeout, or...or...."

...or one less dipshit of the ilk of John Street running the place?
...or one less street to live on that isn't knee deep in trash?
..or the elimination of the pathetic knee-jerk robotic electorate that bows before the gods of unions and the Democrats?
...or a school system that doesn't have 60% of its entering freshmen dropout?
...or a sense that every jackass you walk by on the street isn't one dirty look away from shooting you?
...or some middle relief in the damn bullpen?

[AC]

And I realize the list is by population, not area, but it's still frightening that a metro area of that size is that low in population.

[lunchstealer]

lunchstealer, I think you'd find most of those rich Dallas bastards living in Preston Hollow, not Highland Park, though Highland Park and University Park aren't exactly ghettos, either.

Speaking as another recently transplanted Dallas resident, I haven't made up my mind about such matters as taxes yet, but it's been sunny and in the high 70s here for the last few days, which sure beats NYC or, in my case, Washington D.C. in February. Atypical, yes, but I'll take it while it's here. (Pre-emptively, I like hot summers, too.)

Preston Hollow does bring up the Dallas average, and they're definitely the cream of the in-town-mansion crop, but the Highland Park thing just works a little better from a joke-aesthetic point of view.

I was actually starting to get miffed at the Dallas weather for being too cold there for a while. I mean, the whole reason I put up with the GE Tri-Vection oven that Dallas in August so that I can wear shorts and flipflops in January and February. Had to run the AC for a bit last night, though. That was unfortunate.

Dave - If they impose these kinds of tolls on Texas, that will only serve to keep commuters from Oklahoma and Arkansas out. I actually knew somebody who commuted from Oklahoma to Dallas (well, Richardson, but close enough).

[paul]

"That's the same question I had. San Antonio has a higher state tax level than Houston, which in turn has a higher rate than Dallas? WTF? I obviously don't get their methodology, but that shouldn't happen given the Texas tax structure. It makes me wonder about the validity of the rest of their math"

Property taxes are local in Teaxs. Dallas is the lowest of the major cities in Texas.

[lunchstealer]

Also state tax revenues in Texas come largely from capital on businesses, especially major industries. Oil and gas wells and refineries are big revenue streams. Houston would have more refineries, and San Antonio may have more oil and gas per capita. DFW has no refineries and there's less oil around than other parts of the state. Lots of Dallas's business these days is not particularly capital-intensive. And some of the ones that were here - TI and some Telecom types - took big hits in the 90s and early 00s.

That was actually one of the policy-wonk things that W tried to do as governor that was pretty smart. He tried to reform the tax laws such that the burden wasn't so skewed towards capital-intensive industries, and to get some out of the high-dollar service industries such as engineering, banking, law, and medicine.

[bubba]

Texas is showing a growing fondness for toll roads. And a growth in "downtown" property values. I doubt that a "congestion" tax will ever have a real impact.

[Larry A]

I'm surprised that even R C Dean got blindsided by focusing too much on core taxes vs. overall tax burden.

Well, some of it gets complicated. For instance NYC has a high tax on registering firearms, but administers the process so as to minimize income. Dallas, of course, has no tax on firearms and a near-infinite base.

Texas is showing a growing fondness for toll roads.

Texas government is showing a growing fondness for toll roads.

Yup, that is what public transit will do.

Texas has public transit. It's called "Southwest Airlines."

[The Wine Commonsewer]

Texas also has back breaking property taxes on real property. So much for not having a personal income tax. I calculated that our family is in better shape tax-wise in Californicate (overall tax bite) than if we moved to Texas and bought a nice house in Austin. BTW, housing prices in Austin are attractive.

[Dave W.]

Texas is showing a growing fondness for toll roads. And a growth in "downtown" property values. I doubt that a "congestion" tax will ever have a real impact.

Exactly, it will just show up as a toll an/ot toll increase depending upon what road you take.

Expect the tolls to be higher from the north than the south. Ability to pay and market segmentation and all.

I hope for Big J.'s sake that his house is in South Dallas.

[The Wine Commonsewer]

AC, Phoenix Metro is shockingly big. It ain't LA but it's working hard. I mean there are houses almost to Wickenberg and south all the way to, well, half way to Tucson.

[Eric the .5b]

While Texas doesn't have an income tax, it has a very high sales tax (over 8%)

Not exactly. State sales tax is 6.25%. Counties, cities, and other bodies can levy further sales taxes, with the cumulative burden capped at any one place to 8.25%.

Outside of incorporated cities, it's generally 7.25% in my region. But then, I live near Houston, not Austin or Dallas.

[The Wine Commonsewer]

I guess if I didn't read the comments backwards I'da seen RC Deans remark about the killer property taxes. Well, RC, we aren't moving to Texas.

[Isaac Bartram]

Here in the Sunshine State the Legislature is considering a bill to abolish property taxes. It has to go on the ballot for the people to vote on it.

The plan is to to replace property taxes with a two and one-half percent increase in the sales tax thus upping it to eight and one-half percent. Except for here in Seminole County where we have an additional one percent for roads.

Apparently we get to soak the Yankees or something.

I'm rapidly wondering if I would not prefer the ice and snow in North Dakota (right next door to my old home in Saskatchewan) to the Magic Kingdom thinking prevalent hereabouts (what with trying to evade the underwriting risks of living in a hurricane zone and all).

[Dave W.]

Here in the Sunshine State the Legislature is considering a bill to abolish property taxes. It has to go on the ballot for the people to vote on it.

The plan is to to replace property taxes with a two and one-half percent increase in the sales tax thus upping it to eight and one-half percent. Except for here in Seminole County where we have an additional one percent for roads.

Replacing a more progressive tax with a less progressive tax. How, ummmm, "libertarian."

[Isaac Bartram]

Dave W

I don't belive that anyone has ever accused Florida legislators of being libertatarians.

Morons maybe but not libertarians.

[Dave W.]

Hence the tone quotes.

[Isaac Bartram]

Actually one could argue, in FL at least, that property taxes are not particularly progressive.

Keep in mind that renters in fact do pay property taxes. The landlord must include it in the rent to cover expenses. Since rentals are not eligible for Florida's homestead exemption renters actually end up paying more. Since poor people are more likely to be renters they infact tend to be more heavily burdened by property taxes.

Of course the rich have more expensive house and hence higher taxes but they also have more expensive cars and other luxuries, all of which are subject to sales tax.

And keep in mind that Floridians actually believe that it'll be the Yankees and Canucks that'll be paying the bulk of the tax so residents will get something of a free ride.

I know there's a fallacy there that has a name. Just can't come up with it right now.

[Dave W.]

Actually one could argue, in FL at least, that property taxes are not particularly progressive.

Keep in mind that renters in fact do pay property taxes. The landlord must include it in the rent to cover expenses. Since rentals are not eligible for Florida's homestead exemption renters actually end up paying more. Since poor people are more likely to be renters they infact tend to be more heavily burdened by property taxes.

Of course the rich have more expensive house and hence higher taxes but they also have more expensive cars and other luxuries, all of which are subject to sales tax.

I understand that property taxes are passed on to the rental market to the extent tat the local real estate market allows. In a sense, the taxes set a floor on what local properties will rent for because a landlord will not rent out a unit if she is not going to even be able to make at least the share of property taxes attributable to that unit. better to leave the unit vacant and just wait for the time return on investment in that case.

However, inplaces without a lot of vacant units, this is irrelevant. The market rates are relatively elastic with respect to taxes, which means that the taxes come largely (but not completely) out of exchanged money that would otherwise be landlord profit.

as far as the progressivity thing, it is more instructive to look at the proportion of a person's income that invests in real estate versus a proportion of a person's income that invests in sales taxable items.

the poor generally have zero tied up in real estate investments and a big percentage going every year to sales taxable items.

the rich, even ones with expensive cars and planes, have a significant percentage of their income (investment and employment) NOT going to sales taxable items.

Obviously there are exceptions going in both directions, like thrifty poor person who manages to snag a cumbersome mortgage, or a rich ne'er'do' well who blows the entire family trust on cars.

All that said, it is clear that a property tax is much more progressive than a sales tax. that is why the Florida politicians want it who want it. I also suspect that that is why the kind of "libertarians" who want that kind of thing want it. that is certainly why George W. Bush (Jeb's brother) floated the idea of a national sales tax a couple years ago.

As far as the idea of tourists paying the sales tax, it probably means they will, in Coasean proportions: (i) not come to Florida quite as much; and (ii) not spend as much when there.

[C L]

I'm disappointed that the cut off the analysis at 1 million. I've always been curious how the tax burden in the District of Colubmia relates to other large cities. We have an astonishingly high local income tax, but property tax rates seem reasonable, and are actually lower than some of the suburbs.