Comptroller Stringer Releases Analysis of Remote Work’s Impact on New York City Sales Tax Revenue
For New Yorkers who work and live in the city, spending near the office will be largely replaced with spending closer to home
City sales tax revenue could be reduced by $111 million annually
New York City Comptroller Scott Stringer releasedan analysisof the impact that remote work will have on New York City sales tax revenue. As work from home becomes more routine in the aftermath of the pandemic, City retailers will be impacted by reduced spending by commuters — roughly one million of whom came into the City each day prior to the pandemic, many of whom are likely to do so on a less frequent basis going forward.
“Our analysis shows that the pandemic has fundamentally altered the way people work, with far reaching implications on the city’s economy and tax base,” said Comptroller Stringer. “As remote work and hybrid work schedules keep many workers closer to home, small businesses in residential districts may see a boost from New Yorkers spending more in their neighborhoods. However, the loss of foot traffic and lower sales may be severely felt by small businesses in the city’s commercial districts. We must ensure that all our small businesses get the support they need in this economy; that means cutting red tape and making government more user-friendly, helping immigrant entrepreneurs scale up to new markets, and closing the digital divide so that brick-and-mortar small businesses can effectively compete with larger online retailers. My office will continue to monitor the pandemic’s impacts on New York City’s economy, people, and businesses.”
Specifically, the Comptroller’s report finds
If the roughly 500,000 office workers who commute into the City return to the office on a three-day a week basis, retail demand would be lowered by $1.6 billion annually with a resulting loss in tax revenue of nearly $146 million
This could be partially offset by increased demand from the 110,000 City residents who work outside the City and going forward will spend more time and purchase more in the City. This would be expected to generate new sales of $350 million and sales tax revenue of $35 million
For the 3.7 million City residents who both live and work in the City, spending near the office will be largely replaced with spending closer to home
Overall, City sales tax revenue is estimated to be reduced by $111 million annually as a result of increased work from home. While the loss in revenue is relatively minor when compared to the $7 billion in sales tax revenue that the City is expected to raise in 2022, the impact will be severely felt by the many small businesses that operate in the commercial districts which will face lower sales.
For more details, the full report can be downloaded here.