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1 Josh Barro, New York Governor David Paterson's Tax and Fee Proposals a Mixed Bag 1 (2009)

handle is hein.taxfoundation/ffbfjxz0001 and id is 1 raw text is: FISCAL FACT New York Governor David Paterson's Tax and Fee Proposals a Mixed Bag By Josh Barro Meritorious Sales Tax Improvements Accompanied by Many Unjustified New Taxes Last month, New York Governor David Paterson unveiled a proposal to raise an additional $4 billion through nearly 100 increased taxes and fees, as part of his plan to close New York State's budget gap for fiscal year 2010, which may be as large as $15 billion. This report looks at several planks of the governor's plan and places them in three categories: proposals that move New York closer to sound tax policy, proposals that worsen tax policy, and some proposals that might be good or bad depending on surrounding circumstances. The full list of proposed revenue actions, including their anticipated revenue impacts, are found in the Executive Budget's Briefing Book.' Tax Policy Improvements in New York's Sales Tax Most of the good provisions of Paterson's plan involve broadening the sales tax base. According to a 2004 study by Indiana University Prof. John Mikesell, New York had the country's fourth-narrowest sales tax base in 2003, among the 45 states that levy general sales taxes. Just 30.3% of New Yorkers' personal income ultimately flowed into the sales tax base. The national median among states was much higher, at 43.3%. An ideal sales tax base should include all consumption exactly once and avoid the taxation of intermediate inputs like business-to-business transactions. Inclusion of business inputs results in double taxation: a purchase is taxed at the intermediate stage and again when it is sold to an end-user. January 2009 No. 159 U 1AX FOUNDATION

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