An Opinion

Doing Business in New York?

Friday, 30 October 2009 00:00

A few weeks ago, the nonprofit Tax Foundation issued its 2010 State Business Tax Climate Index. New York ranks next to last on the list of business-friendly states. Yes – next to last with only New Jersey ranking below our state! That story caused me to reflect on my business past.

Some 30 years ago, one of my business responsibilities was to decide on locations for new facilities. We looked at many things in making the decision. As this piece unfolds, I will reference some of the subjects we explored in making location decisions.

First, let us take a look at what issues gave New York the next-to-last nationwide state ranking? New York finished last in terms of personal income taxes. The state also has one of the highest levels of property and unemployment insurance taxes.

In addition, the new tax on employers and self-employed workers who live in New York City or the seven suburban counties did not help New York’s poor ranking nationally.

Based on New York’s tax structure – not just income taxes – there is no way for us to go but down.

While we can truly say that high salaries for teachers and administrators have kept our schools at a high national ranking, there is much which could be done to lower those school taxes. And school taxes account for over 60 percent of your total real estate taxes!

First, there could be cooperative purchasing of everything from office supplies to heating oil and from lawn services to handling payrolls. Volume purchases always drive prices down.

Also, I see nothing wrong in consolidating water, sewer and even fire districts across the Island. That step would also reduce costs and lower taxes.

Back, now, to selecting a business location. Key issues include personal income taxes, real estate taxes, sales taxes, and even the attitude of local and state governments toward the business community. Next, the local environment is examined. Who makes up the work force – education levels and employable ages are very important. Beyond people, are there significant numbers of post high school academic opportunities? Are recreational facilities adequate for the community? Long Island, in particular, has positive qualities — except for our taxes.

Now back to the poor ranking of New York as a place to do business. While we are very poor in terms of taxes across the board, we do have a great environment as outlined in this piece. One of the people challenges we face is that young people leave Long Island in droves, because they cannot afford to live here after college.

Unfortunately, I see little opportunity for this to change over the next several years at either the state or local levels. The result will be more family geographic spread. Too bad.