Yesterday, the Kauffman Foundation released results from a survey that showed New York as a recipient of one of the worst ratings in the nation when it comes to small business.
The full report can be found here.
Below is my response to these disturbing, but not surprising results.
Failing Grade for NY Business Policies Should Alarm Albany
Albany (April 5, 2012) – A new report by the Kauffman Foundation giving New York a “D” based on how difficult it is to start a new business is another piece of evidence on top of a mountain of proof that the state’s economic policies have to change radically.
“What this means is that Governor Cuomo and the Legislature can’t be satisfied with the reforms that they’ve undertaken so far,” said Mike Durant, State Director for the National Federation of Independent Business (NFIB). “New York cannot survive in a competitive global economy with policies that make it nearly impossible to start a new business.”
Durant said the findings don’t surprise small business owners in New York who have warned for years that the state’s tax and regulatory policies are punishing, confusing and sometimes incompatible with each other.
“It can cost thousands of dollars and require hundreds of hours every year to comply with state regulations. Add to that all the taxes that New York imposes at the state and local levels, and it’s easy to see how we earned a failing grade.”
Durant said that lawmakers and the Governor could boost their grade by enacting real mandate relief for local governments in order to control or reduce property taxes.
“The property tax cap was a significant start, but we still pay among the highest property taxes in the country. It’s still the largest single tax expense for small businesses,” said Durant. “They’ve got to create fiscal flexibility for our schools and local governments beyond the Tier VI pension reform. It starts by establishing minimum health insurance contribution rates for public employees and retirees; reforming our procurement policies and undertaking an examination of existing mandates that are strangling New York’s communities and draining taxpayers pockets.”
Durant said that New York has to tame the regulatory monster as well so that it’s easier to start a new business and sustain existing businesses.
“Let’s do an inventory of all the regulations and identify those that are duplicative, outdated and unnecessary, and let’s get rid of them,” said Durant. “This tangle of regulations, many of which exceed or duplicate federal standards, creates a serious competitive disadvantage. Regulatory reform will allow critical infrastructure projects to get started and finished in a shorter period of time. And business owners can spend their money and time hiring new employers and serving customers instead of paying fees and filling out paperwork.”
Finally, said Durant, lawmakers should work harder to carve unnecessary programs from the state budget so that they can bring taxes into line with other states.
“Our top income tax rate is still one of the highest in America. Pennsylvania’s top rate is 3 percent. Florida has no income tax at all,” said Durant. “In terms of population migration New York is a net loser to Pennsylvania, Florida and almost every other state where taxes are lower.
“Some of those people who are leaving are retirees,” he continued. “But many are job creators who see no advantage in staying here and creating jobs.”
Durant credited Governor Cuomo and legislative leaders for making progress in the past two years.
“But the competition is making progress too and we’re not keeping up,” he said. “This is a very disturbing report card and we need to get a lot more serious about growing the economy and making it easier to start a business in New York.”
For more information about NFIB, please visit www.nfib.com/new_york.