The Institute for Justice, which argued the landmark Kelo case before the Supreme Court nearly five years ago, has a new report out that calls New York “perhaps the worst state in the nation when it comes to eminent domain abuse — the forcible acquisition of private property by the government for private development.”

New York’s em-dom abuse — I wrote about this, too, a long time ago, here — has fiscal consequences. In Brooklyn, the threat of eminent domain has allowed developer Forest City Ratner to push business owners into “voluntarily” selling their property for a proposed basketball stadium / affordable-housing scheme.

The threat of eminent domain has frozen business activity in the “footprint” of the stadium and apartments towers, which is bad for New York’s fisc, and also bad for New York’s stated goal of encouraging more middle-income jobs and diversification of the economy away from Wall Street.

Further, if the project ever gets built, it will narrow the business-tax base, since it replaces tax-paying business owners with a politically connected developer who benefits from a myriad of tax exemptions.

The Institute for Justice says that while state courts have generally rubber-stamped the Empire State’s eminent domain abuse, the state’s highest court has an imminent chance to reverse this. Starting next week, it will hear property owners’ challenge to the Ratner case.