New York state’s skyrocketing business taxes are taking a toll on its corporate dominance.
For the third time, New York has been trumped as the home to the most Fortune 500 companies.
Adding insult to injury, it was unseated by Texas, which can now boast of having fostered the country’s most profitable companies, a Fortune list released last week shows.
California topped us in 2003, and Texas beat us by one firm in 2005.
“It doesn’t take a corporate CEO to understand that with low business taxes and a zero-percent tax on individual income, Texas is a much more attractive place to locate than New York,” said Scott Hodge, president of the Tax Foundation.
New York’s tax system ranked third to last in the nation in the 2008 Business Tax Climate Index put out by the Washington, DC-based foundation.
And state legislators have just worsened the situation. New York’s newly adopted state budget calls for increasing the tax base for certain corporations, taxing the first $10 million in capital rather than just the first $1 million.
The change is expected to particularly impact banks and financial-service firms and bring in an additional $102 million in the current fiscal year.
Texas has no personal-income tax – compared to New York’s 6.5 percent – and rather than a corporate-income tax, which tops 17 percent in New York City, it has a gentler franchise tax, said E.J. McMahon, director of the Manhattan Institute’s Empire Center for New York State Policy.
“The Fortune 500 companies that are based in New York City, or that have offices in New York City, are the most heavily taxed corporations in the country, bar none,” McMahon said.
A spokesman for Gov. Paterson said the Empire State was still “the economic engine of the country and that it holds an enviable reputation in the global marketplace.” With Post Wire Services