The Tax Foundation, which ranked New York dead last on its latest annual State Business Tax Climate Index, today issued a highly complimentary analysis of the corporate tax reduction and reforms enacted as part of 2014-15 New York State budget. However, while it called the corporate tax changes “impressive,” the Tax Foundation also made it clear that the state’s business tax climate still has plenty of room for improvement.
The money graph:
In the 2014 State Business Tax Climate Index, which evaluated state tax laws as of July 1, 2013, New York’s corporate tax system ranked 25th best out of the fifty states, and the overall tax structure ranked 50th, or last. If the changes enacted by the bill were in full effect for the most recent version of the Index, New York’s corporate tax system would have instead ranked 4th best of the fifty states, behind only three states with no corporate income tax. The state’s overall rank would have improved two spots to 48th, beating New Jersey and California. [emphasis added]
New York also was ranked 48th on the Business Tax Climate Index in 2008. In effect, in terms of the overall Tax Foundation ranking, it’s as if we just took two steps forward a few years after taking two steps backwards.
Not coincidentally, 2008 was the year before the state adopted a significant, supposedly temporary increase in personal income tax (PIT) rates on high-income households and business owners. Governor Cuomo and the Legislature have twice extended the bulk of that tax increase, which applied to earners of $1 million or more.
As the Tax Foundation and Empire Center noted in a joint statement last year–which also was quoted in today’s Tax Foundation tax analysis—the phase-out of the PIT hike needs to be a top priority.