Experts say the city’s rising levies and property taxes have taken their biggest toll on its nearly 200,000 small-business owners.
“The city extracts a very high cost on small businesses,” said Manhattan Institute senior fellow Steve Malanga. “The biggest problem that they face is actually property taxes.”
According to Malanga, the commercial property tax in most cities is generally 1.7 times that of the residential property tax, but in New York City, the rate is eight times more.
Annual revenue from property taxes has doubled from $8 billion in 2001 to $16 billion today.
“Businesses pay about half of all property taxes in New York,” Malanga said. “In Los Angeles it’s about 2%. When you’re property-tax burden doubles over seven or eight years, that’s eating up a lot of your profits, and that’s been a big problem for small businesses in the city.”
Even business owners who rent office space have been hit by the property taxes because landlords often write the increases into the lease.
John Logue (pictured), the owner of Hinsch’s, an ice cream and candy store in Bay Ridge, said his lease requires him to pay half of all the property tax increases. “I am making less money today operating the same business than I did 14 years,” said Logue, 54, who has lived in Bay Ridge his whole life.
His family has owned the store since 1961. Currently, he has seven full-time employees and four part-time workers.
On top of the city and state payroll tax, Social Security and Medicare he pays for employees, Logue said the city also hits him with a slew of permit fees. He recently had to pay $50 to obtain a certificate to collect sales taxes for the city and the state. In the past, it was free. He also pays the city to have a restaurant certificate, an exhaust-system permit and an illuminated-sign permit.
Logue said his water bills have also increased by nearly 50 percent in the last three years. Currently, he pays $1,600 every three months to the city.
“I’m getting to the point where I’m thinking about leaving New York,” he said.