The Tax Foundation recently conducted a study of the tax climates in each of the fifty states and then rated and ranked them based on five categories: corporate tax, individual income, sales tax, unemployment insurance tax, and property tax. The Tax Foundation’s rankings are designed to show how well state tax systems are structured, rather than simply rank the states by the amount of taxes assessed.
New York finished 2nd last (49) in overall tax climate and it ranked in the individual tax categories as follows: 7 (corporate tax), 49 (individual income tax), 43 (sales tax), 32 (unemployment insurance tax), and 47 (property tax). Prior to 2017, New York was ranked dead last in 2014 and 2015 before modestly rising to 49th in 2016.
New York legislators enacted a substantial corporate tax reform package with this year’s changes improving New York’s rank in corporate income tax climate from 11th to 7th. In 2016, the state lowered its corporate income tax rate from 7.1 to 6.5% and reduced the capital stock tax rate from 0.15 to 0.125 percent. However, its business tax climate ranking is still an abysmal 49th.
Unlike changes to a state’s health care, transportation, or education systems, which may take extended periods of time to implement, changes to the tax code may quickly improve a state’s business climate. In the competition among states for both fledgling and thriving businesses, it is apparent that states with the best tax systems, and climates, will be the most effective in attracting new businesses and generating economic growth.
It is wise for taxpayers, whether an individual or business located in the New York or Tri-State area, to consult with a tax professional to help assess their current tax situation, looking ahead to the future. If you have any question about taxes, especially in planning ahead for the next filing season, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
