Tax the Rich to Aid the Poor: Funding NYC’s Safety Net
It may not be obvious — what with homeless people camped out on sidewalks and crumbling housing projects — but New York City has the country’s most generous safety net for poor people, according to an analysis by faculty at the Craig Newmark Graduate School of Journalism.
Ironically, that safety net is funded in large part by the very income inequality that it targets in the form of taxes paid by New York’s wealthiest. Crain’s New York Business published the report by Greg David, director of Newmark’s Business Reporting Program and Ravitch Fiscal Reporting Program, and Cara Eisenpress, a graduate of the school who also teaches there.
New York ranks in the top 10 U.S. cities for income inequality, but the state also has the country’s highest combined state and local taxes, including a “millionaires’ tax.” In 2016, the top 1 percent earned 35 percent of all income in the city, and their tax payments constituted 43 percent of city income tax revenue and 40 percent of state income tax revenue, David and Eisenpress wrote. That amounts to $20 billion for the state and $6 billion for the city. “If even a few leave, the loss of tax revenue would be significant,” they said.
Twenty percent of New York City residents live in poverty, while over 40 percent live in near poverty. To aid those residents, city and state expenditures include more than $1 billion for affordable housing; $1.5 billion on shelter operations and housing placement; $670 million on HIV/AIDS, domestic violence and employment services; and a new $100 million program providing MetroCard discounts for the poor. Local and state budgets also supplement federal funding for food stamps, health care, and assistance to families in temporary crisis.
But more than any other benefit or regulation, the reporters wrote, it’s been the increase in New York’s minimum wage (from $8 hourly in 2014, to $15 hourly this December) that’s given working-class New Yorkers the biggest boost. Cash-assistance recipients dropped 1 percent and food-stamp recipients 2.4 percent.