New Yorks business climate cannot get much bleaker.
The annual report by the Tax Foundation on the business tax climate in the 50 states put New York at the bottom, which was worse than last years 49th ranking, due to its high taxes.
Despite moderate corporate taxes, New York scores at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes, and the sixth-worst property taxes, the national group said.
Property taxes are averaging $2,105 per person. The state ranked 23rd with its moderate corporate tax. The report also cited New Yorks highest-in-the-nation cigarette tax of $4.35 a pack, an alternative minimum tax on corporations and high sales taxes of 4.48 percent. Wyoming, South Dakota and Nevada with no corporate or personal income taxes ranked at the top in the business tax climate.
But other factors are at work making it very difficult for businesses in New York. The state business climate is not helped by the latest attacks on the securities industry and by government financial regulatory policies that have a lasting impact on New Yorks economy and tax revenue.
The federal and state governments have now initiated legal action against leading banks for their mortgage policies. Last week, state Attorney General Eric Schneiderman launched a civil lawsuit against JP Morgan Chase as successor to Bear Stearns & Co. for alleged fraud in lending practices that had been encouraged by the federal government during the housing boom leading to the recession. And now the federal Justice Department is doing the same thing with its lawsuit against Wells Fargo & Co.
At the same time, the financial industry continues to lose jobs, resulting in a loss of state revenue, while adjusting to new regulations imposed by Washington that discourage end-of-year cash bonuses to investment bankers and traders. State Comptroller Thomas P. DiNapoli said the employee bonus pool for securities workers is expected to decline for the second year in a row as the industry sees a net loss of 1,200 jobs so far this year with more expected by the end of the year.
Although the financial industry led past economic recoveries in the state, that is not the case this time. The economic losses can be significant in a state that has 1.5 times the number of jobs in the securities industry as second-place California. Wall Streets share of state revenues has dropped from 20 percent to 14 percent today.
Given the policies making it very difficult to do business, New Yorks business climate should surprise no one.