The 2007 State Business Tax Climate Index, published this week by the Tax Foundation, ranks New York 47th among the states in the competitiveness of its business-tax climate. The report was especially critical of New York's alternative minimum tax on corporations and individuals, and of its gasoline taxes, state and local sales taxes, and unemployment insurance taxes.

The business tax climate index considers 113 variables in five broad categories: corporate taxes, individual income taxes, sales taxes, unemployment taxes, and property taxes.

The Tax Foundation said its report is designed to highlight areas in which states can change their approaches to taxes to make themselves more attractive for growth of jobs and businesses.

"The modern market is characterized by mobile capital and labor," the report said. "Therefore, companies will locate where they have the greatest competitive advantage. States with the best tax systems will be most competitive in attracting new businesses and be the most effective at generating economic and employment growth."

Because most mass job relocations within the nation are from one U.S. state to another, the report added, " state lawmakers must be aware of how their state’s business climate stacks up to others in their region and nationwide."

"Taxes affect business decisions, job creation and retention, plant location, competitiveness, and the long-term health of a state’s economy, the report added. "A state with lower tax costs will be more attractive to business investment."

The report is also sharply critical of "lucrative tax incentives and subsidies" use as job-creation incentives.

"Lawmakers create these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for a woeful business climate plagued by bad tax policy," the report said. "A far more effective approach is to systematically improve the business tax climate for the long-term."

The most competitive business-tax climates, the report argued, "levy low, flat rates on the broadest bases possible, and they treat all taxpayers the same. Variation in the tax treatment of different industries favors one economic activity or decision over another. The more riddled a tax system is with these politically motivated preferences, the less likely it is that business decisions will be made in response to market forces."

New York's ranking represents a slight improvement from the Tax Foundation's 2006 index, which ranked New York State dead last.