New York is America’s least free state – By George J. Marlin

The following appears in the April 12-18, 2013 issue of the Long Island Business News:

Despite the fact that the tax-and-spend New York budget for fiscal 2013-2014 contains fiscal gimmicks and does nothing to relieve struggling municipalities from unfunded mandates, Gov. Andrew Cuomo has been joy riding around the state proclaiming he is “Hap Hap Happy” because the severely flawed budget was passed on time.

The governor does not seem to grasp that an extension of $2 billion in annual “temporary” taxes, a raid on the State Insurance Fund and more long-term bonded debt only puts off the fiscal day of reckoning and perpetuates New York’s reputation as pro-tax and anti-business.

Did I mention disbursement of $400 million of tax revenues to targeted people two weeks before the 2014 election? Crony capitalism tax subsidies for a pro-football team and a late night talk show?

The “Freedom in the Fifty States” study released by George Mason University’s Mercatus Center in late March confirms New York’s poor standing. The report, which assigns ratings “based on how their policies promote freedom in the fiscal, regulatory and personal realm,” concluded that New York is “by far the least free state” in the Union.

New York holds the distinction of having the highest combined taxes in the nation. Fourteen percent of total income is paid to the state, municipalities and school districts.

The Empire State is also the most indebted at 33.2 percent of income.

Regulations are horrendous. There is eminent domain abuse, rent control, onerous labor laws, no right-to-work laws and tyrannical environmental regs.

Health insurance rating regulations are the strictest in the nation and have destroyed the non-group market. Mandated coverage has caused premiums to skyrocket.

Unlike many other states, New York does not have a strict balanced budget requirement and does not require a super-majority of the legislature to approve tax increases.

As for personal freedom, the Mercatus Center determined that the state’s ranks last due to volumes of restrictive laws. Motorists are highly regulated and home school regulations are excessive.

Antiquated rent control laws, according to the report, are “estimated to cost residents about $300 million in dead weight loss alone.”

The study’s conclusions are in sync with other reports including the 2013 Thumbtack Small Business Survey, which gave New York a D+ on regulatory burden, and the 2012 Chief survey, which rated the state the second worst for business.

New York comes in dead last according to the Freedom study’s co-author Jason Sorens, who teaches political science at SUNY-Buffalo, primarily due to “taxes.” This helps explain why 9 percent of the state’s population, on net, left for greener economic pastures between 2000 and 2011 and why Florida, which has no state income tax, is the No. 1 destination for migrating New Yorkers.

Meanwhile, the freest state, North Dakota, with unemployment at 3.4 percent – versus N.Y.’s 8.4 percent – is thriving due to low taxes and debt and business-friendly regulatory agencies. North Dakota’s economic and personal income growth has outpaced every state since 2009 thanks to its hydraulic fracking boom.

Not that we want to move there. But Cuomo should heed North Dakota’s example and implement genuine tax and regulatory reform before his joy ride takes him over the fiscal cliff.

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One Comment on “New York is America’s least free state – By George J. Marlin”

  1. Dave Morales Says:

    The danger of such large, sudden tax cuts is illustrated by the experiences of the three states that enacted comparable or larger tax cuts as a share of revenue during the 1990s: Massachusetts, New Jersey, and New York. New York cut taxes by 24 percent during the 1990s, but when its boom ended, it faced some of the nation’s largest budget deficits, saw its bond ratings downgraded, and was forced to raise taxes substantially. New Jersey cut taxes 17 percent in the 1990s, but this led to a major budget crisis that has persisted throughout this decade and required substantial tax increases. Massachusetts’ 17 percent tax cuts in the 1990s boom presaged an economic and fiscal crisis in the 2002-04 period, resulting in significant reductions in public services as well as tax increases. [4] In these three states, some or all of the tax cuts had to be reversed by subsequent tax increases and public services suffered declines.

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