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A Study in Contrast: Taxation in NY vs TN

A Study in Contrast: Taxation in NY vs TN

During the past week’s news cycle, much has been made of New York Governor Andrew Cuomo complaining about wealthy residents leaving the state. This is nothing new. Rochester area residents certainly remember the day that Tom Golisano – founder of Paychex – announced he was changing his residency to Florida. Why did this highly successful business man, an entrepreneur and billionaire decide to leave? Perhaps for multiple reasons, but at the top of his list… Taxes. Taxes. Taxes.

There’s a reason we have taxation, so let’s briefly consider the issue of services in a state. All of us agree that services cost money and the residents of any state receive the benefits of those services. Therefore we share in the expenses. So, what are the sources of revenue from the citizens of a state?

Revenue through taxation – every state has its methods

In New York, the residents pay income tax, property tax (renters pay this too, but it’s a hidden part of their cost), sales tax, gasoline and fuel taxes, and various fees. Fees are everything from dog licenses, to car registrations, to various excise taxes on utilities, and more. There are other sources of revenue for state government, but for now, let’s simplify the concept to focus only on direct taxes and fees paid by individuals. Now let’s compare Tennessee with New York…

In Tennessee we have no state income tax. Let me write that one more time and please absorb this very important fact…

In Tennessee there is NO state income tax.

Tennessee – Keep more of that which is yours!

In Tennessee, property owners do pay property tax, but the rates are only 1/4 to 1/3 of comparable homes in New York. Yes, that’s right and without exaggeration. Those of you who remember the house Dee and I owned in New York might be shocked to learn that we paid more in property taxes on our small New York home than people pay for a home here in Tennessee that is twice the size and worth $250,000. Think about that…

Let’s talk sales tax. In this category, we in Tennessee pay more. In New York, the sales tax rate is 8.0 – 8.5%. Here in Tennessee, we pay 9.75% and we pay that tax on more items including food.

Consider gasoline and fuel taxes that help offset the consumer sales tax. I’m operating on memory here and I might be off a bit, but in New York, as best I recall, the gasoline tax was 65 cents per gallon. I’m unsure about the rate here in Tennessee, but what ultimately matters is the cost per gallon. In Tennessee since the first of the year I have been paying anywhere from $1.78 to $2.10 per gallon. There are multiple factors in the per gallon price, and as with any commodity, there are fluctuations. But if you live in New York, what have you been paying at the pump the last sixty days or so?

Hmmm… Guess we just crossed into Tennessee!

How do you feel friends and family in New York State, as your governor complains about a 2.5 billion dollar shortfall this fiscal year, when you are paying much more than your fair share of taxes to support liberal ideology and social programs that disgust the sensibilities of you and your friends?

Meanwhile, here in Tennessee, according to a recent newspaper article, the last state fiscal year ended with an 800 million dollar rainy day fund. How does the state of Tennessee do it, especially when tax rates are non-existent (i.e. income tax = zero) and property taxes and gas taxes are so low as to be laughable in comparison? Fiscal responsibility and conservative political practice are part of the answer. Another factor is a common sense approach to government that truly is for the people, instead of pandering to wasteful liberal social engineering, political special interests, and wealthy donors.

Still love New York?

© Jeffery J. Michaels / Plain English Publications 2019
(Quotations allowed with attribution to this blog)