04/21/2021 | Press release | Distributed by Public on 04/21/2021 10:12
By SBE Council at 21 April, 2021, 12:02 pm
by RAYMOND J. KEATING-
For decades, New York elected officials have imposed one of the most hostile tax climates in the nation. And now it's just gotten much worse.
Of course, these New York tax increases - falling significantly on entrepreneurs, businesses of varying types and sizes, and investors - mean fewer resources and incentives for taking on the risks and uncertainties of starting up, building, rebuilding and investing in businesses. New York's various and considerable governmental burdens - including onerous taxes - have ruined the state's competitiveness, and sent unmistakable signals that the Empire State is not the place to do business.
The New York Exodus
It should surprise no one that opportunity and people have long been fleeing New York. Indeed, one of New York's top exports is people. Consider, for example, net domestic migration, which measures the change in a state's population less births, deaths and international migration, thereby gauging population movement between the states.
New York had the worst record from 2010 to 2019 by losing a net 1,379,210 people to other states. New York again was tops in shipping people off to other states from 2000 to 2009, with net domestic migration of -1,686,583. For good measure, from 1990 to 1999, New York lost a net of 1,888,936 in population to other states, which was second worst among the states.
But there's more. Over the last five years - 2016, 2017, 2018, 2019 and 2020 - while the U.S. population has grown, New York's total population fell in each year.
Tax Hikes Will Fuel Departure
Do elected officials seriously believe that the following list of tax increases will not further feed the exodus from New York, especially during a pandemic, and with more and more people being exposed and open to working mobile?
Corporate Rate Hike: The state's top corporate income rate increased, retroactive to January 1, 2021, from 6.5 percent to 7.25 percent. This tax increase is scheduled to expire at the end of 2023. However, it also needs to be pointed out that downstate businesses pay an MTA tax surcharge of 30 percent, which increases the corporate tax rate on a significant portion of the state to 9.425 percent.
Top Personal Income Tax Rate Goes Higher: The state's top personal income tax rate of 8.82 percent was increased to 9.65 percent for incomes between $1.08 million (single filers) and $5 million; to 10.3 percent for earners between $5 million and $25 million; and to 10.9 percent over $25 million. Again, these are retroactive to the start of the year.
Top Combined Rate - NY #1: Consider that when combined with New York City's personal income tax (top rate of 3.876 percent), the combined top rate of 14.776 percent ranks as the highest state-local individual income tax rate in the nation.
Wealthier individuals arguably are - and can be - more mobile. And when they move, so do their enterprises. As businesses and investment leave the state, or never arrive in the first place, opportunity for all is reduced.
Indeed, taxes on upper-income earners and businesses do not only affect those targeted individuals and enterprises. Instead, the increased costs and altered incentives have clear fallout in terms of lost economic, income and employment growth. The tax increases just imposed in New York make no economic sense, especially when the state and the nation are trying to climb out of a deep economic hole.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.