Report: High taxes and regulations threaten New York's competitive edge

ALBANY, N.Y. (NEXSTAR) — A new report from the Public Policy Institute of New York State concludes that the local business climate drives away businesses and forces out residents. The report, titled “Blueprint for New York – Creating a Roadmap for Change,” found that only 2% of business owners surveyed felt that Albany lawmakers represent their interests.

Among business leaders, 72% don’t believe New York’s economic conditions are good. Only 21% believe the state is on the right track, and just 3% feel that regulators understand and support their businesses.

The report—commissioned by the Public Policy Institute of New York State, an affiliate of The Business Council of New York State, and the New York State Economic Development Council—is available to read at the bottom of this story. It followed over a year of focus groups with more than 500 business leaders and 40 associations.

The report asserts that New York has lost its competitive edge, with a local economy in freefall. For starters, we ranked 50th in both migration and taxation for the 2020 to 2022 period, meaning we lost more people and had higher individual taxes than any other state, according to the report.

It found that New York also leads the nation in new legislation introduced. Lawmakers filed 24,195 bills in the previous legislative session, five times the national average. That pace of regulation means businesses can’t keep up.

Many business leaders said in the report that New York’s taxes and regulations make it too expensive and difficult to run a business. We have over 300,000 regulations, and the proprietors surveyed wanted fewer state and local regulations and lower business taxes from the state.

The report also warned about expensive worker’s compensation and health insurance claims to employees. In 2022, New York had the 14th-most expensive workers’ compensation costs in the nation, and in 2024, our workers’ comp premium rates were 182% of the national average, also among the highest. Health insurance is also higher for New York business owners, compared to the national average.

In 2023, New York’s effective state business tax rate was 5.9%, making it the ninth-highest in the nation. Altogether, the report argues that high taxes, a prohibitive regulatory and legal environment, and the overall cost of doing business prevent growth, stifling new investment and innovation.

The state also ranks in the bottom third for individual income, sales, property, and unemployment insurance taxes. The report says that these issues contribute to population decline.

The population plateaued over the past 20 years, growing by just 0.08%. Other states with similar growth rates include Louisiana (+0.09%) and Mississippi (+1.2%). In 2023, we had the third-slowest population growth in the nation, making us the 47th fastest-growing state.

Between 2005 and 2025, New York lost 9.6% of its prime working-age population. But Texas grew theirs by 32.5% over that time. The population is also aging, meaning we’ll have 1.5 million fewer working-age residents in 2035 than we did in 2005.

From 2020 to 2022, New York lost more domestic taxpayers than any other state, weakening the workforce and local tax base. We have the fourth-highest percentage of housing-burdened households in the country, with 38.6% of households spending more than 30% of their income on housing.

Beyond population decline, businesses also struggle with attracting new employees to the state. Plus, the average income of people moving out was higher than that of those moving in, resulting in a net loss of wealth.

Workforce issues also extend to the lack of affordable childcare. The report tallies the cost of childcare for one infant and one toddler at about $36,000 a year, more than the average cost of housing or college tuition.

The report makes an example of the antiquated Scaffold Law that increases insurance rates for construction projects by at least 10%, resulting in less housing built. Enacted in 1885, the law is supposed to protect workers from “gravity-related” injuries—falls—holding businesses fully liable even if it was the worker’s fault.

New York is the only state with such a law. State Senator Dean Murray, the top Republican on the Committee on Commerce, Economic Development and Small Business, said that this and other laws should be tweaked for poor wording, but allowed that workers still need those protections.

Assemblymember Ed Ra, the top Republican on the Ways and Means Committee, said the report’s findings were unsurprising, since other reports have also said we have the “worst business climate in the country.” He said that other states see New York as a place where businesses can’t succeed without a “sweetheart deal.”

According to Ra, the state should invest in programs like BOCES, which help train for the trades, growing the state’s tax base by making more well-paying jobs available to young people.

And the report highlights what New Yorkers “already know and feel every single day,” according to a statement from Republican U.S. Congressmember Elise Stefanik of New York. “Single party Democrat rule has absolutely failed New York workers, businesses, and families.”

Patrick Orecki, Director of State Studies at the Citizens Budget Commission of New York, pointed out that New York collects 79% more in taxes per capita than the national average. He said that legislators should “cut unnecessary regulations to show that New York is open for business.”

One business leader quoted in the report said state regulations create a “painful environment.” Another surveyed for the project questioned whether officials “even really WANT to grow manufacturing in the state?”

Respondents said paperwork is slow, difficult, and challenging, and the report also noted a lack of coordination between agencies and departments, causing delay. The report quotes an executive from a New York-based manufacturing firm who said, “We are focused on expanding our business…in any other state but here.”

Ashley Ranslow, New York State Director at the National Federation of Independent Business, said she agrees with the findings of the report, which “lays out the facts and data behind what’s driving that sentiment that small businesses are struggling.” She questioned the volume of regulations coming from the Empire State compared to other blue states or other states in the Northeast.

Murray said there are many bad regulations that the legislature needs to address on a case-by-case basis. But he explained that lawmakers don’t listen to the business community when passing reforms. He said, “We don’t have lawmakers who understand business” or the impacts of their regulations. Because they’ve never worked in the private sector, Murray said many legislators see businesses as the enemy rather than a partner.

According to a statement from Zilvinas Silenas, president of the Empire Center, the state should create a government agency to “defend businesses from bureaucratic overreach.” He agreed that bad policies ruined New York’s competitive edge and drove businesses away. “Families have no choice but to follow them,” he said in a statement.

But Andrew Perry, Director of Fiscal Research at the Fiscal Policy Institute, said that the report “mischaracterizes New York’s economy, which is among the most competitive in the nation” and that there is no evidence that business regulation or the length of state legal statutes are correlated with states’ economic strength. Even according to the report, New York is a national leader in innovation. The state is a top destination for venture capital investment, ranking fourth in the country for funding rates.

Perry noted that the report lists California as the only state with more regulations than New York, but he described that state as our closest competitor in average wages and concentrations of high-wage industries, while Texas and Florida lag behind. He called the affordability crisis shared by these two blue states a “symptom of both states’ prosperity, which drives high demand for too little housing.”

He pointed to our concentration of high-wage jobs in finance, technology, and professional services, which is 20% higher than the national average. He also offered the statistic that average wages in these industries are 60% higher than in Texas and 75% higher than in Florida.

Democratic Assemblymember Marianne Buttenschon, who chairs the Assembly Small Business Committee, said there is “always room for improvement to promote and support businesses in New York State.” She acknowledged concerns about regulations and taxes that hinder business, and said the committee is “always open and willing to listen to all residents and businesses” to find solutions.

Buttenschon said her goal is to clear the way for local businesses, not to put up roadblocks. To address some of the sentiment in the report, she explained that her committee is working on issues like New York’s Advanced Clean Truck Rule, credit card swipe fees, and the type of “Frequency of Pay” lawsuits that Ranslow flagged.

That committee is also holding a public hearing on October 9 to hear testimony from the business community.

Take a look at the report below: