Tax Foundation: New York State Has America’s Second Worst Business Tax Climate

Legislative column from Assembly Minority Leader Brian M. Kolb (R,I,C-Canandaigua)
October 9, 2009

Regular readers of my weekly legislative column know that I often cite the work of various independent, non-partisan “think tanks” and policy research institutes that issue reports on New York’s economy, business climate and tax structure. One of the most important – and nationally respected – is the Tax Foundation, a nonprofit, non-partisan research and public education organization based in Washington D.C. that has routinely examined tax and fiscal activities at all levels of government stretching back to 1937.

As part of its ongoing mission to provide credible, useful information for policymakers at the federal, state and local levels of government, the Tax Foundation recently released its 2010 “State Business Tax Climate Index” (SBTCI) for all 50 states. The SBTCI is a useful resource for lawmakers and especially taxpayers to determine their states’ relative tax competitiveness and how it measures up against others. The Tax Foundation encourages policymakers to utilize the SBTCI to analyze and consider potential changes to their tax systems that could improve their standing – and overall economic competitiveness – in relation to other states.

As noted in the Tax Foundation’s report, the SBTCI is determined by drawing upon a total of 112 variables into five component indexes that each determines a different sector of a state’s total business tax climate. The five state indexes comprising the SBTCI are: Corporate Tax; Individual Income Tax; Sales Tax; Unemployment Tax; and the Property Tax. The SBTCI rates the business tax climates of all 50 states on scale of zero (representing the “worst”) to 10 (representing the “best”) based on those areas. This rating is especially important as the higher a state’s score, the more competitive and favorable its tax climate is for business. Conversely, a lower score on the SBTCI means a less competitive tax climate for employers.

All that having been said, where did New York rank when measured against the 49 other states in terms of its 2010 SBTCI? Surprise, surprise, New York once again ranked in the bottom 10 – the worst – of state business tax climates. In fact, the Tax Foundation analysis determined that New York had the nation’s second worst business tax climate, coming in at 49 out of 50 – with only New Jersey ranked lower.

The 10 states with the worst business tax climates, as assessed by the Tax Foundation’s SBTCI were, in order: Vermont (41); Wisconsin (42); Minnesota (43); Rhode Island (44); Maryland (45); Iowa (46); Ohio (47); California (48); New York (49) and New Jersey (50).

The ten states with the best SBTCIs – and, with them, the most favorable state business tax climates, were, in order: South Dakota (1); Wyoming (2); Alaska (3); Nevada (4); Florida (5); Montana (6); New Hampshire (7); Delaware (8); Washington (9) and Utah (10).

The Tax Foundation report confirms what anyone reading my column who has ever paid New York’s prohibitively high income, property, sales, corporate and unemployment taxes already knows so well: our state’s excessive levels of taxation stifle our competitiveness, make it harder for families to afford living here and send businesses packing in search of a less taxing state in which to locate their operations and, in the process, create or save private sector jobs.

The following comment contained within the executive summary of the Tax Foundation report succinctly summed up the nexus between taxes and job creation: “Thus, a state with lower tax costs will be more attractive to business investment, and more likely to experience economic growth.” Is the Empire State in need of economic growth? Just ask one of the more than 874,300 New Yorkers who were out of work in August – or the thousands of small businesses who face Herculean challenges every day in the form of paying some of the nation’s highest tax, energy, labor, legal, transportation, pension and workers’ compensation costs, while trying to earn a profit. The answer to that question is an emphatic “Yes!”

These are the reasons why I am working so hard to advance real solutions to change New York’s tax policies through my continued support for enactment of a real property tax cap, along with the other recommendations of the Suozzi Commission, including a property tax circuit breaker and significant unfunded mandate relief for school districts and localities. It also is why we are fighting job-killing taxes and advocating for legislation that would eliminate the state’s Ton Mileage Tax and reduce New York’s Corporate Franchise Tax.

You can read the Tax Foundation analysis of the 2010 SBTCI of all 50 states at its official website. Review the Tax Foundation report, draw your own conclusions and share the findings with family, friends, neighbors, co-workers and anyone else you know who is genuinely concerned about New York’s high taxes and their negative impact on our state’s economic competitiveness and the effort to create more private sector jobs.

As always, constituents wishing to discuss this topic, or any other state-related matter, should contact my district office at (315) 781-2030, or e-mail me at