December 13, 2007
New index finds New York's economic past and future equally bleak
ALBANY—New York's past economic performance and future economic outlook are among the bleakest in the nation, according to a new report by the American Legislative Exchange Council (ALEC), a bipartisan association of state lawmakers based in Washington D.C.
The ALEC-Laffer State Economic Competitiveness Index ranked New York's economic outlook as 49th in the nation – below only Vermont. Its rankings have been posted in the Public Policy Institute's online compendium of key economic and social indicators, Just the Facts. The Public Policy Insitute is the not-for-profit research affiliate of The Business Council.
The ALEC-Laffer State economic outlook ranking was based on 16 variables, including top marginal personal and corporate income tax rates, property and sales tax burdens, debt service as a percentage of total tax revenue, and estate taxes.
In terms past performance, the Empire State ranked 47th or third worst in the nation, based upon its 10-year performance in three variables: personal income per capita, absolute domestic migration, and non-farm payroll employment.
The report pointed to a period in the mid 1990s when New York lawmakers and then-Governor George Pataki enacted tax cuts that evoked a steep increase in revenue and a resurgence in the state's economy.
"However, taxes rose again in the late 1990s and early 2000s, and the upstate region is again one of the most depressed areas in the nation,” the report said.
To better its outlook and shrink the number of people moving out, New York should copy not only the moves of better-performing states, but also that of Ireland, the report said. Until recently, Ireland had one of the worst economies in Western Europe. But in the 1990s, the country “dismantled” its welfare system and drastically reduced tax rates, the report said. The nation succeeded in lowering its corporate tax rate to 12.5 percent, the lowest in the industrialized world.
“In the succeeding 10 years, for the first time in decades [Ireland's] population grew (to 5.7 million), GDP rose at twice the rate of Europe's, and more than 1,000 international companies, such as Intel, Bristol-Myers, Squibb, Microsoft, Dell, and Motorola, moved in,” the report said.