New York’s Bad Small Business Climate Getting Worse

If you want to learn about running government, take a look at what politicians in New York do … and then do the exact opposite.

Consider the latest bad idea to bailout the bloated, wasteful Metropolitan Transit Authority, which runs mass transit in the New York City area: A proposal to impose a new 0.33 percent payroll tax on all businesses operating within the MTA’s 12-county service area. This would come on top of a 17-percent surcharge already imposed on all business taxes in the region, along with a 0.375 percent sales tax and a mortgage recording tax – all going to subsidize mass transit. For good measure, the proposal package includes allowing the MTA to impose regular fare and toll increases every two years based on inflation without any public hearings.

So, the MTA basically would get rewarded with even more money in response to years and years of incompetence.

For good measure, other tax hikes are in the mix for New York City and New York State. As E.J. McMahon, director of the Empire Center for New York State Policy, recently noted, New York City Mayor Michael Bloomberg would like to impose a commuter income tax and increase the city’s resident income tax, while State Assembly Democrats are looking to jack up the state personal income tax rate in order to avoid budget cuts.

How bad would all of this be for New York?

Well, consider that the state ranks a dismal 45th on the just-released “Small Business Survival Index 2008,” which ranks the states according to their public policy climates for entrepreneurship. Why does New York rank so poorly? Among the state’s many negatives are high personal income, individual capital gains, corporate income, corporate capital gains and property taxes; the imposition of alternative minimum and death taxes; a large number of health insurance mandates; high electricity costs; a large number of government employees; high gas and diesel taxes; a very high level of government spending; and a poor ranking in terms of highway cost effectiveness.

So, rather than looking to make the state more competitive in these tough economic times, many New York politicians seem intent on making matters even worse. Some people – some politicians – just never learn.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council