New York, Home Of Wall Street, Is Criticized for High Business Taxes
Like pretty much everywhere else, jobs and the economy are the main issues in the midterm election and the heated race for governor between Democrat Andrew Cuomo and Republican Carl Paladino. Earlier this month, Cuomo proposed to cut taxes on new businesses in New York and to offer businesses tax credits for hiring unemployed New Yorkers. For his part, Paladino vows to cut taxes by 10% in his first six months in office. Officials from both campaigns did not immediately respond to requests for comment. Officials from the administration of Gov. David Patterson also were not available,
New York's main business lobby, the Business Council of New York, agrees with the Tax Foundation's conclusions, according to Michael Moran, a spokesman. He added that the state economy is still suffering because of $8 billion in tax hikes that were enacted last year alone. The group is backing Cuomo in the election.
"We think it's fair and not surprising," he says in an interview. "The last two years have made it worse.... Clearly, both gubernatorial candidates understand that taxes can not continue to rise in New York. There is a great deal of frustration among businesses."
Many other New Yorkers are no doubt frustrated as well. As the Tax Foundation notes, the state has the third worst individual income tax and ninth worst sales tax
Competition in Taxation
Of course, tax rates matter quite a deal to businesses. States often offer huge incentives for companies to relocate or place major operations in their borders. Apple (AAPL) reportedly received huge tax breaks for locating a $1 billion data center in one of the poorest areas in North Carolina. The state of Alabama has been criticized for using millions of dollars to lure Honda Motor (HMC) , Hyundai, and Mercedes-Benz to build plants within its borders. Dell (DELL) got more than $240 million in incentives to locate a plant in North Carolina, only to close it four years later. But, as the Tax Foundation noted, businesses have plenty of incentive avail themselves of such generosity.
South Dakota topped the Tax Foundation's list. That's not surprising, since the home of Mt. Rushmore has been praised many times in the media for its business-friendly policies. It has no corporate income tax, no personal income tax, no business inventory tax, and no inheritance tax.
South Dakota Gov. MIke Rounds says: "We roll out the red carpet for businesses. We cut the red tape, but we don't cut corners."
The ten best states in the Tax Foundation's 2011 State Business Tax Climate Index were: South Dakota, Alaska, Wyoming, Nevada. Florida, New Hampshire, Delaware, Utah and Indiana. North Carolina, Rhode Island, Minnesota, Maryland, Iowa, Ohio, Connecticut, Minnesota, California, New Jersey and New York had the least business-friendly policies.