New York State Exposed: Where do state sales tax dollars go?

Posted at: 11/04/2013 7:14 AM
Updated at: 11/04/2013 8:35 PM
By: Lynette Adams

The list is long. Sales, gas, income, property, all items you pay taxes on. It's those taxes that are causing many families to pick up and leave New York state. Some lawmakers agree, we are overtaxed. So what can be done about it? 

One lawmaker put it simply that we are in a crisis. Too many taxes are affecting your bottom line. New York State makes billions each year off your purchases. That money goes into the same fund as the gas tax money. In order for you to get a break, lawmakers say some drastic measures must be taken.

Kelly, Palmyra resident, said, “It's irritating, but I don't really think about it because I was born and raised in New York and it is what it is.”

That's the attitude of many New Yorkers. From clothing to electronics, you automatically expect to pay a tax on the products and services you buy or lease. In New York State, it is typical 8.48 percent. That's split into two parts, four percent for the state and another 4.48 percent for the local area. If you're buying clothing under $110, you don't pay the state portion. Food is tax exempt.

Last year, The Census Bureau reported New York made $22.8 billion dollars thanks to your purchases. It was fourth on the list. Number one was California with $38 billion. When you consider New York State has among the highest income, property and corporate taxes of all the states, it begs the question, why not give resident a break on sales tax.

Kelly said, “It doesn't make sense, makes no sense. It is a very expensive state to live in.”

So how does New York rank when it comes to how much you're charged? According to the Tax Foundation, a tax policy watchdog group, New York has the seventh highest combined sales tax out of the 50 states. Tennessee is number one, but only beats New York by one percent at 9.4 percent. Five states have no sales tax. They are Alaska, Delaware, Montana, New Hampshire and Oregon.

News10NBC talked with New York State Assemblyman Bill Reilich about this. 

Assemblyman Bill Reilich, 134th Assembly District, said, “We have a budget much larger than any of those other states, $135 billion or so dollars on an annual basis. It is largely driven by two factors: the cost of education and the cost of the benefits we provide on a social level to those less fortunate. We have the richest program in the nation when it comes to those benefits.”

Reilich says education and Medicaid are included in the general fund. But, it's not just sales tax that goes into that general fund. You also contribute every time you buy gas. 

Allan Mallette, of Newark, agrees with Reilich, but has his own theory why New York's sales tax is high.

Allan Mallette said, “We just have an expensive government, everybody's overpaid. Someone has to pay all that.”

Mallette says he and his wife just came back from a cruise and paid no sales tax. 

Mallette said, “My own personal belief is that we should have a national sales tax and everybody pays the same amount on what they buy.”

Reilich said, “I agree we are overtaxed in the state of New York and the downside to that is businesses are not investing here to grow here, therefore, the jobs are not here and when we educate our young they go off to Virginia, North Carolina to seek employment, so other states benefit from the level of education we have provided and ultimately, residing there they are contributing to their economy. So it really is a bad situation that we have created in New York. I believe it is just a matter of time before we have to change this model and dramatic cuts and changes will have to be made.”

Reilich said lawmakers will have to make some tough calls to lessen your sales tax burden.

Reilich said, “We have to look at all aspects. We have to look at education and say how can we do this more effectively, more efficiently we can look to the benefits we provide to the less fortunate. Do we provide benefits that exceed what are really necessary?”