Taxes as Regulatory Tools: An Argument for Expanding New York City's Taxing Authority

Abstract

This Note explores the regulatory role of tax policy in New York City and argues that the City’s power to tax independently should be increased. Currently, New York City must seek permission from the New York State Legislature to impose new taxes or change the structure of existing taxes. This restriction is justified primarily by the revenue-raising function of tax policy — an analysis that ignores the important role tax policy plays in creating effective regulatory regimes. The first Part of this Note sorts out the tangled relationship between fiscal policy tools such as taxation, regulation, user fees, and spending, and suggests factors relevant to determining which tool is most appropriate to use in a given situation. The Note next discusses New York State’s scheme for distributing authority over taxation and regulation, and provides an overview of local government law. The concluding Part of this Note argues that New York City should be given more independent taxing authority and directly addresses arguments against the granting of greater municipal taxing power.

Keywords: Tax, Local Government Law

JEL Classification: H71, K34