New York City’s estimated personal income-tax payments in June declined to the lowest level since 2017, marking the first sign that the stock-market tumble is hitting the revenue of the financial capital, according to City Comptroller Brad Lander.
June’s estimated payments, which are closely tied to capital-gains realizations, were 31% lower than the same period last year, data released Monday by the fiscal watchdog showed. Last month, U.S. stocks entered a bear market for the fourth time in two decades, although the S&P 500 Index has since pared some of the losses and is now down 19% since the start of the year.
Although New York City’s economy has diversified in recent years, the high-paying securities industry still accounts for a disproportionate share of income-tax collections. This sector has benefited from the lopsided recovery from the pandemic. Indeed, overall personal income-tax collections are 5.1% higher year-over-year, primarily due to taxes withheld from monthly wage earners, Lander reported.
But the boost from higher salaries and job growth may fade, the comptroller said. “These gains are likely to dissipate with economic growth slowing and a forecast decline in Wall Street bonuses,” Lander said in the report.
New York City’s adopted budget takes into account a slowing economy and stock-market declines. The budget projects total personal income-tax revenue will decline 7.7% in fiscal 2023 compared to fiscal 2022.
California, whose progressive tax system means the rich pay more, is also closely watching the fortunes of Wall Street. Capital-gains realizations as a share of the state’s personal-income collections are the
State and local-government revenues remain strong for now, Fitch Ratings analysts said in a report this week. Still, analyst Arlene Bohner said in a statement that municipalities “face a tougher test in the coming months with macroeconomic risks rising.”
— With assistance from Martin Z. Braun
