New York City may be the city where dreams are made of, but not if those dreams are paying low taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es. Tax rates start at 8 percent and quickly climb, with a single person making over $25,000 already in the 10 percent tax bracketA tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat. (see table). Millionaires pay a top rate of 12.696 percent (and that’s on all their income: New York has an “income recapture” provision that applies the top rate on all income, not just income above $1 million).
Combined State and Local Income Tax Rates for New York City, 2013
|
Tax Rate |
Applicable Income Bracket (Single Filer) |
Applicable Income Bracket (Joint Filer) |
|
12.696% |
>$1,000,000 |
>$2,000,000 |
|
10.726% |
>$500,000 |
>$500,000 |
|
10.498% |
>$200,000 |
>$300,000 |
|
10.298% |
>$75,000 |
>$150,000 |
|
10.098% |
>$50,000 |
>$90,000 |
|
10.041% |
>$25,000 |
>$45,000 |
|
9.984% |
>$20,000 |
>$40,000 |
|
9.434% |
>$13,000 |
>$26,000 |
|
8.784% |
>$12,000 |
>$22,000 |
|
8.157% |
>$11,000 |
>$21,600 |
That top rate may go even higher to 13.23 percent, says frontrunner and Democratic mayoral nominee Bill deBlasio, the city’s ombudsman. He wants to raise the city’s top income tax rate from 3.876 percent to 4.41 percent, which he hopes to spend on universal prekindergarten classes ($340 million) and after-school middle school programs ($190 million). The tax increase would affect 54,000 taxpayers (about 1.4 percent of the total), and would not involve income recapture. The state would need to okay the tax increase.
DeBlasio’s main opponent is Republican nominee Joe Lhota, former chairman of New York’s MTA subway and bus system. Lhota says he supports the universal pre-K proposal but not tax increases; he says he would focus on rooting out inefficiencies in city government.
Since I’m writing about New York City, I need to include this chart which shatters a common misconception about those who live there. People sometimes say, off the cuff, that a $250,000 or more income is “middle class” or “just getting by” in New York City. Having visited occasionally, I can attest that the city has a high cost of living, and the Manhattan housing prices I see on Million Dollar Listing are certainly eye-popping. But the average New York City single filer earned $47,238 in 2009; the average married couple earned $92,671. Two-thirds of New York City residents make less than $50,000. From the city Comptroller:
Those numbers are higher than most of the rest of the country. But most people in New York City don’t earn enough to have the “problem” of choosing which $7,000/month apartment is best for them.
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