No. 20 September 2001
What New York Has Gained From Tax Cuts
For Immediate Release
September 5th, 2001
New York City: The Manhattan Institute released a new study showing that the tax cuts implemented in New York City over the past four years have created approximately 80,000 private sector jobs. It says additional tax cuts are important to the city’s continuing economic progress, and, conversely, that increasing tax rates would cost the city tens of thousands of jobs.
The enactment of local tax cuts on a record scale has been one of the cornerstones of New York City's fiscal recovery over the past seven years. A major rationale for these tax cuts, as stressed by Mayor Giuliani and other city officials, was to encourage new growth in the New York's economy. This study, written by Edmund J. McMahon, a Senior Fellow at the Institute, indicates that tax cuts accomplished that purpose.
Specifically, the study found that:
- The personal income tax, sales tax and property tax reductions enacted by the city in the last four years have generated 80,000 new private sector jobs, or roughly one fourth of the city's total employment growth since 1997.
- More than 6,500 new jobs will be generated by tax cuts included in the City’s fiscal 2002 budget that are still awaiting the state Legislature’s approval.
- Nearly 15,000 new jobs could be added to New York’s employment base by eliminating the remainder of the income tax surcharge first adopted a decade ago.
- Restoration of the 12.5 percent income tax surcharge, repealed in 1998, would result in the destruction of approximately 25,000 jobs. Restoring both of the Dinkins-era surcharges would cost the City nearly 37,000 jobs.
These results were determined using NYC-STAMP, a New York City version of the State Tax Analysis Modeling Program first developed by the Beacon Hill Institute at Suffolk University in Boston. NYC-STAMP estimates the impact on employment of changes in four categories – income tax, sales tax, property tax, and general corporation tax.
Mayor Rudolph W. Giuliani said today at the release of the report:
“Today’s study illustrates an important chapter in the story of our city. Tax reductions have helped more than 80,000 New Yorkers find work in newly created jobs. Tax reductions have helped even more New Yorkers put food on their dinner tables, take their children to baseball games, and build better lives for themselves and their families.”
Edmund J. McMahon is a Senior Fellow for Tax and Budgetary Studies of the Center for Civic Innovation at the Manhattan Institute. Mr. McMahon studies the tax and spending policies of New York City and New York State and issues recommendations on how these policies can be reformed to increase economic growth.
The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas that foster greater economic choice and individual responsibility.