The Partnership for New York City issued a report last week that looks at the role of the financial sector (“Wall Street,” as it is commonly known) in the global economy, and also as a part of New York City‘s tax base.
The report finds that the financial services industry directly employs 310,000 employees in New York City, supports one million jobs in the city, and contributes about $8 billion annually in taxes to the city. But it also notes that this industry employs 50,000 fewer people than it did in 2000.
The report argues that New York must take steps to maintain its central position in the global economy. Partnership for New York City President Kathryn Wylde writes:
“To maintain Wall Street’s role not just as an elite financial marketplace but also as a center for employment and innovation, the government must step up. We need, among other things, major investments in airport capacity, including new air-traffic-control technology; broadband and wireless investments to reduce download times…; more resources for commercial courts to resolve disputes; a coordinated plan to defend our financial sector from cyberattacks; tax incentives that encourage retention of middle-income jobs on Wall Street; and, to spur innovation, a lower corporate tax rate on patent-related income.”
We recognize that the state is heavily reliant on the tax revenues that Wall Street produces. But being too reliant on any one industry can be a bad thing – just look at how the 2008 financial meltdown devastated the state’s tax revenues in the 2009 state budget?
Ms. Wylde is correct in her assertion that New York City should maintain its key role in the global economy. But we’ll take her argument one step further and say that the other part of the equation is to grow the rest of the state’s economy as well, so that New York is not does not become the proverbial “one crop farmer.” By reducing the tax burden, eliminating unnecessary regulations and making smart investments that support economic development, we avoid that fate.