This week the Tax Foundation released its “State Business Tax Climate Index Rankings”. This index is meant as an indicator of which states, due to their tax systems, are most hospitable to businesses and thus to economic growth. In case you were wondering, New York came in 49th. That’s 49th out of all 50 states.
Is there any wonder why New York has not been especially effective in generating economic growth or employment? Well our tax system looks like a pretty big reason. So how should New York grow its employment? How should it build its economy? How can it unlock New York’s potential?
The regulatory environment in New York continues to deter new businesses from coming here and send existing businesses across state lines. Taxes and cost matter to businesses. If a state has a more competitive tax system odds are that’s where the jobs will head. While the governor’s Three-Way Agreement on Tax Reform, back in December, was a good start to help the middle class and manufacturers, it was not enough. The burden on businesses comes from absurd regulations that add to cost, and nothing else.
Let’s take, for example, the Unemployment Insurance Base Period. This regulation raises the unemployment rate for many businesses unfairly. They often must fund unemployment insurance for an employee who quit, took another job, or was fired for cause and then was laid off from a new job. The law then says that the previous employer is responsible for unemployment even though the person quit or got fired. So why should the original employer see their rates go up?
Okay, if you need even more evidence, let’s look at Workers Compensation. Workers Compensation (like Unemployment Insurance) shouldn’t go away, it’s necessary. But it’s important to reform the regulation so it works like it’s supposed to. Injured workers enter a system that is full of costly litigations and long waits. There are no treatment guidelines, which, along with the lengthy waits, can lead to extensive periods of unemployment. Employers watch as their insurance premiums skyrocket. It’s costly for businesses, and costly for workers. Reform would be good all around.
And, our newest example, the Wage Theft Prevention Act. What is it? It’s literally when your employer has to send you a letter with your rate of pay on it. You then have to sign it (so your employer and the state know it was sent to you) and send it back to your employer who then has to keep it on file for years. I think most people are aware of their rate of pay, and, if they forget, they can look on the paystub that usually comes with their check.
Want even more examples? You can look at Unshackle Upstate’s 2012 Policy Agenda. New York isn’t the 49th worst tax climate in the country because of some mysterious gigantic hidden fee for corporations, it’s because of small silly regulations that just need to make sense. It’s time to make New York a business leader again. It’s time to Unlock NY.