Brian and Amy are your typical middle-class New Yorkers. They have worked hard to build a comfortable life for their three children in Hicksville, L.I., and hoped to remain there to be near family.
But every year during tax season, they are hit by a bill from the federal government that makes them question if they will be able to continue living in such a high-cost area.
I asked Third Way, a centrist think tank focused on middle-class issues relevant to families in our area, to actually crunch the data on how much New Yorkers pay in federal taxes compared to similar families across the country.
The report, “A Tale of Three Cities,” compared the effects of the federal tax code on three typical middle-class families: one from Hicksville, another from Akron, Ohio, and a third from McAllen, Texas.
The numbers were striking. The data shows that New Yorkers pay more in federal taxes because the federal tax code does not account for differences in wages and costs of living across different regions. This means that many New York families that are solidly middle class and may make more on paper than similar families elsewhere do not qualify for many income-based tax credits.
For example, a worker in low-cost, low-wage McAllen can qualify for tax credits to help with his child care costs, while a similarly hardworking New Yorker, who may earn more but also pays more for everything from gasoline to groceries, cannot access the same amount of benefits.
Two bills I have introduced would help level the playing field for New York taxpayers. The Tax Equity Act would adjust tax brackets for all areas with a higher cost of living than the national average, and the Student Loan Employment Benefits Act would allow those working to set aside up to $5,000 of their salary, tax-free, to repay their student loans.
The full Third Way report can be viewed at israel.house.gov