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Study: New York Tops In Taxes
Thanks to its sky-high personal income, sales and business taxes New York state has the least business-friendly climate in the nation. According to a study by the tax foundation, the State Business Tax Climate Index (SBTCI): "Taxes matter to business. Taxes affect business decisions, job creation and retention, plant location, competitiveness and the long-term health of a state’s economy. "Most importantly, taxes diminish profits. If taxes take a larger portion of profits, that cost is passed along to either consumers (through higher prices), workers (through lower wages or fewer jobs), or shareholders (through lower dividends or share value). Thus a state with lower tax costs will be more attractive to business investment.” In a chart-laden study, New York showed up on chart after chart as having some of the most punitive tax rates on business. In one instance, the listing of the best and worst states in terms of business tax policies, New York ranked as the worst of all 50 states. The study notes that the 10 worst states "have one theme in common: None rank highly on any of the SBTCI’s five component indexes. For example, New York has the worst individual income tax in the country, in addition to the 7th and 3rd worst wealth and unemployment taxes respectively. New York receives its highest score on its business tax, 18th best,” while neighboring New Jersey had the worst record for business taxes.
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According to the study’s authors, Curtis S. Dubay an economist at the Tax Foundation and Scott A. Hodge, the foundation's president: "The taxes paid by businesses should be a concern to everyone because they are ultimately borne by individuals through lower wages, increased prices, and decreased shareholder value. "States do not institute tax policy in a vacuum. Every change to their system makes their business tax climate more or less competitive compared to other states, and makes the state more or less attractive to business.” In a report on the study, the New York Sun wrote that there have been two other studies that have been critical of the state’s tax policies. One, conducted by Milken Institute, a California-based think tank, places the New York metropolitan area behind 160 other metropolitan areas in the nation in a ranking of job growth, which takes into account recent employment and salary data. Keeping taxes low pays off, the study noted. "Examples of companies choosing states due to favorable tax systems are plentiful,” the authors wrote. "A recent example, from July 2005, is Intel’s decision to build a multibillion-dollar chip making facility in Arizona due to its favorable corporate income tax system. California struggles to retain businesses within its borders because Nevada provides a low tax alternative. "Anecdotes such as these reinforce what we know from economic theory, that taxes matter to businesses, and those places with the most competitive tax systems will reap the benefits of business-friendly tax climates. "Every tax law will in some way change a state's competitive position relative to its immediate neighbors, its geographic region, and even globally."
According to the Sun, one Republican candidate for governor, John Faso, a former minority leader in the Assembly, blamed the tax problem on what he described as a long-standing culture in Albany. "What is wrong is that New York for 40 years has acted as though it were immune to forces in the national and international economy," he told the Sun. "The single most important thing to do is to put state spending on a diet so we can cut taxes." A former New York secretary of state, Randy Daniels, told the Sun he would hold spending at its current level for three years, former Massachusetts Gov. William Weld is proposing a "Taxpayer Bill of Rights" limiting state tax revenue spending to the prior year's total, with small amounts added to take into account population growth and inflation.
Editor's note:
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