In the 2017 State Business Tax Climate Index released last week, the Tax Foundation once again praises New York policymakers for enacting “a substantial corporate tax reform package” that continues to phase in and this year lowered the state’s corporate income tax rate from 7.1 percent to 6.5 percent.
Each year, the Tax Foundation analyzes more than 100 tax variables in five different categories: corporate, individual income, sales, property and unemployment insurance taxes. The latest changes improved New York’s rank on the corporate income tax component of the Tax Foundation’s national index from 11th to seventh.
And yet, New York’s overall index ranking remains 49th—as it has been for several years. The Empire State’s individual income tax ranking is 49th, its property tax ranking is 47th and its sales tax ranks 43rd.
Taken together, New York’s taxes create a climate that is among the least inviting to businesses anywhere in the country.
Heather Briccetti, president and CEO of the Business Council of New York State Inc., lauded the corporate tax reform, but added: “Unfortunately, this is the lone bright spot for the Empire State. Our overall ranking of 49 is simply unacceptable. No economic development program in the world would allow us to overcome the systemic faults in our tax system that makes us uncompetitive in relation to our fellow states.”
What’s more, many other states are taking actions to make themselves more competitive, which increases the harm if New York stands still.
As noted here before, some critics say the State Business Tax Climate Index—which has been researched annually for 13 years—is weighted more to the individual income tax than the corporate tax. It’s also true that the index is not the only measure of states’ business environments.
Even so, tax systems matter.
The best strategy to improve this state’s ranking is more broad-based tax reduction, actions that spread the benefits to all New Yorkers.
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