New York’s the pits — especially when it comes to economic development, according to a new study.
The Empire State ranked dead last when it comes to its economic outlook based on Albany’s tax policy.
The report, authored by economists Arthur Laffer, Jonathan Williams and Stephen Moore, gives New York state, along with New Jersey (45) and California (46), low marks because of excessive tax and spending policies that hurt businesses and individuals.
“We hate to keep picking on California, New Jersey and New York, but they continue to be models of how not to govern a state,” the report warned. “These three states,” the report continued, “impose tax rates at or near the highest in the nation and about twice the national average.”
New York placed 50th for its high personal and corporate tax rates, 12.62 percent and 15.99 percent, respectively.
The annual report, “Rich States, Poor States” by the American Legislative Exchange Council (ALEC), also takes aim at taxing big earners to close budget shortfalls.
“You cannot balance the budget on the backs of the 1 percent of the most productive citizens of a state. They will leave, and as the 2010 census points out, they are leaving,” the report says.
A state official said the study had some important data but rejected its conclusions. He said the state’s economy is “more complex than the study indicates.”
Indeed, New York State Comptroller Thomas DiNapoli said the economic performance “was among the best in the nation from 2007 to 2011.”
DiNapoli also said New York has the entrepreneurial innovation and skilled work force that “clearly are essential ingredients for a healthy 21st-century economy.”
Several calls to Gov. Andrew Cuomo’s press office seeking comment on the report were not returned.
Still, the report warned that states like New York tax and spend far too much.
The report also criticized the retirement costs for state workers, which are significantly higher than in the private sector. It said some states have followed the lead of the private sector and switched retirement plans from defined benefit, the traditional pension plan, to defined contribution, which are commonly 401(k) plans.
DiNapoli rejected the 401(k) for government workers. He argued 401(k)s have failed, in part because the average person isn’t capable of understanding them.
“Most workers are not professional investors and don’t know how to make money work best for them,” said Mark Johnson, a spokesman for the comptroller. “Defined benefit plans are much more cost-efficient than defined contributions,” he added. Johnson also said New York state “has one of the strongest pension plans in the country.”
Still, the report charged that paying for these high costs is turning millions of Americans into tax exiles.
The nine states with no personal income tax growth had an average population growth of 13.75 percent in the century’s first decade. Those with the nine highest personal income tax rates, which includes New York and New Jersey, grew at about half that rate, 6.48 percent in the same period.
Which states did the report say had the best economic climate? The top five were Utah, South Dakota, Virginia, Wyoming and Idaho.