Implications of Taxation and Spending Policies
As consumers prepare to commence their holiday shopping in a few weeks, I believe it is important for legislators and voters to take a moment to look at the current economic climate in New York and determine whether we are on the path that best serves the needs of our state, and more importantly, our upstate communities.
We all know that upstate communities have been hit hard economically for the better part of two decades due, in part, to globalization, but mostly from an antiquated state government that never adapted its over-burdening tax and spend policies to respond to the global economy. Because of this, businesses have been forced to close their doors and lay off workers each and every year. Large companies have closed manufacturing plants and moved to other states where the cost of business is much less.
Without a doubt, the number one factor that has determined whether businesses stay open or move has been the crippling tax structure the state currently has in place. Unfortunately, New York has ranked in the top three for state and local tax burdens out of fifty states for the past thirty-seven years.
To put that number in perspective, New Yorkers pay an average of $2,825 per capita in state taxes each year, compared to the national average of $2,359. That totals nearly $54.5 billion in taxes, whereas the average taxpayer in Florida pays $2,056 in state taxes each year for a total of $37.2 billion in taxes collected. Not surprisingly, Florida is favorably ranked thirty-eighth out of fifty states for personal tax burdens.
As a result of these excessive tax rates, over 1.2 million New York residents have moved to other states since 2000, the greatest population loss of any state in the nation during that time. Many of those moving out of state are our young college graduates who are finding employment elsewhere.
Because of this shift, businesses are finding it hard to find skilled workers while trying to keep up with their ever-expanding tax base. According to the Tax Foundation’s Business Tax Climate Index, which rates states based upon how well the state’s tax system encourages investment, New York is ranked 48th out of 50 states. Once again, Florida ranks above New York at No. 5, by having a business-friendly tax climate. Clearly, our ranking was hurt by the fact that the 2007-2008 budget raised business taxes by $611 million.
New York’s state budget has grown far more than the average income of most families. This is unacceptable and must end. We cannot afford spending taxpayers’ hard-earned money at three times the rate of inflation.
I believe the answer to many of the problems that New York and, in particular, Upstate New York have had economically stem from the current personal and business tax structures. If the Legislature were to lower the per capita tax burden to the national average of $2,359, that would result in an extra $500 for every man, woman, and child in New York. This discretionary income for families could then be pumped back into the New York economy, creating a bigger demand for goods and services and, therefore, more jobs for our young and skilled alike.
Reducing the tax rate is not the end all and be all solution to the problems faced by businesses and families here in New York. Yet, we must all recognize the importance that fiscal responsibility plays in determining the economic future of our great state. If we continue to over-tax and over-spend in Albany, we will only be able to take solace in the fact that we only have two more spots to drop before we are the most unfriendly state for businesses to invest in.