NEW YORK STATE Cannot dismiss a tough climate
It should come as no surprise that New York state once again ranks near the bottom of the Tax Foundation’s annual Business Tax Climate Index.
State legislators created a higher tax bracket with a 7.25% rate for companies making over $5 million. The top marginal individual income tax rate rose from 8.82% to 10.9%. The legislature also reversed the phaseout of the state’s capital stock tax, reinstating the tax at 0.1875%.
Is it any wonder the state’s economy is recovering at a slower rate than the rest of the country? Through November, private employment in New York was roughly halfway back to pre-pandemic levels.
It should also come as no surprise that as the taxes increased, population decreased. E.J. McMahon of the Empire Center for New York State Policy noted recently in a New York Post opinion piece that New York’s loss was likely beneficial for its neighbors. New Jersey, which saw its annual outflow of population cut in half, and Pennsylvania, which saw its usual migration losses slow to a trickle. Connecticut actually gained people after losing an average of 22,000 per year from 2010 to 2020. New York’s policies – both pandemic and otherwise — are helping prompt people to load moving trucks to neighboring states.
The state legislative year began in earnest Wednesday with Gov. Kathy Hochul’s State of the State speech. Soon, the proposed state budget will be released and the state legislative session will begin.
History shows the state Legislature and governor’s office aren’t likely to enact policies that will improve the state’s tax climate or reverse the state’s population loss. They have yet to learn from the state’s recent history — which means we are doomed to repeat history.