In New York before the recession, the top 1% of earners, who made more than $580,000 a year, paid 41% of the state's income taxes in 2007, up from 25% in 1994, according to state tax data. The top 1% of taxpayers paid 40% or more of state income taxes in New Jersey and Connecticut. In Illinois, which has a flat income-tax rate of 5%, the top 15% paid more than half the state's income taxes.*** As they've grown, the incomes of the wealthy have become more unstable. Between 2007 and 2008, the incomes of the top-earning 1% fell 16%, compared to a decline of 4% for U.S. earners as a whole, according to the IRS. Because today's highest salaries are usually linked to financial markets—through stock-based pay or investments—they are more prone to sudden shocks.
The income swings have created more extreme booms and busts for state governments. In New York, the top 1% of taxpayers contribute more to the state's year-to-year tax swings than all the other taxpayers combined, according to a study by the Rockefeller Institute of Government. In its January report downgrading New Jersey's credit rating, Standard & Poor's stated that New Jersey's wealth "translates into a high ability to pay taxes but might also contribute to potential revenue volatility."
Correcting misconceptions about markets, economics, asset prices, derivatives, equities, debt and finance
Saturday, March 26, 2011
Top Earners Saw 4 Times Average Income Drop During Recession: States' Over Reliance On Taxing High Income Earners Created State Tax Revenue Shortfalls And Deficits During Recession
Posted By Milton Recht
From The Wall Street Journal, "The Price of Taxing the Rich: The top 1% of earners fill the coffers of states like California and New York during a boom—and leave them starved for revenue in a bust." by Robert Frank:
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