IT’S no secret what drives in novation, economic growth and job creation forward: It’s entrepreneurs and investors taking risks and starting up, investing in and building businesses.
New York policymakers often talk a good game about all this — but over the years they’ve worked hard to make the state one of the most inhospitable places in the nation to invest and do business.
Just consider what state lawmakers did this year. Facing huge budget deficits and a grim economy, they recklessly jacked up government spending and imposed big tax hikes — including higher tax rates on upper-income individuals who tend to be business owners and investors and a new payroll tax on businesses to feed the MTA.
Gov. Paterson, Assembly Speaker Sheldon Silver and other elected officials took a very bad situation in New York and managed to make it even worse.
In fact, according to the just-published 2009 “Small Business Survival Index,” which I write for the Small Business & Entrepreneurship Council, New York has the fourth-worst public-policy climate for entrepreneurship among the 50 states and District of Columbia. Only California, New Jersey and DC rank worse.
Pulling together 36 different measures, mainly tax and regulatory, the index is the most comprehensive comparison of government-imposed or government-related costs inflicted on entrepreneurs, small businesses and investors. To rank as poorly as New York does, a state has to perform badly in many different areas.
The state, for example, imposes the sixth-highest personal-income-tax rate, the fifth-highest individual capital-gains-tax rate, the seventh-highest property-tax burden, the second-highest gas tax and the fourth-highest diesel tax. New York’s corporate-income and capital-gains taxes are also weighty, as are its consumption-based taxes.
And while many states don’t impose their own death taxes, or their own state individual and corporate alternative minimum taxes, New York inflicts all of these.
Nor does it end there. New York imposes a large number of health-insurance mandates, which drive up premium costs. Overall governmental costs are sky high, with New York claiming the third-highest level of per-capita state and local government spending and the 10th-largest number of state and local government workers relative to population.
And don’t forget about the third-most-burdensome electricity costs.
Entrepreneurs face especially high costs in New York City and its surrounding suburbs. The city piles on with added personal-income, corporate-income, unincorporated-income and capital-gains taxes, for example. And Nassau, Suffolk and Westchester counties impose some of the highest property-tax burdens in the nation.
Add all of this up, and New York’s policies scream at entrepreneurs and investors to build businesses and create jobs somewhere else — almost anywhere else.
As it turns out, New York’s biggest export in recent decades has been people. In terms of net domestic migration (that is, movement of people between the states, excluding births, deaths and international migration), from 2000 to 2008, New York ranked as the nation’s top exporter of people, registering a loss of 1.6 million.
People both follow and create economic opportunity. It should be no surprise, given New York’s dismal business climate, that so many are seeking and creating opportunities elsewhere.
But this “climate” is not beyond human control — it’s created by bad decisions made by elected officials. And if they won’t change their ways, the public can change them.
Raymond J. Keating, author of the “Small Business Survival Index,” serves as chief economist for the Small Business & Entre preneurship Council. He lives on Long Is land and is a columnist with Long Island Business News.