New York Tax Rate Forces Small Businesses To Leave State, Move To Florida

New York’s rising tax rates are forcing out small businesses and residents from the Big Apple to low-cost locations including Florida, according to a study.

It notes that the tax-fatigued New Yorkers see greater comfort in places like the Sunshine State. The study on small business growth said Miami has overtaken New York City.

According to analysts, although New York is booming, the cost of doing business in the city is too high, especially for small business owners.

Higher wages and rental hurting businesses

Rohit Arora, CEO of Biz2Credit, who led the research observed that business budget of an entrepreneur in New York is adversely hit by many factors. The study factored in rankings, revenues, credit scores, and other variables of businesses in arriving at its conclusions.

Arora pointed to the rising rents and labor costs ever since New York enacted a minimum wage of $15 per hour.

“New York City mandates paid sick leave. That has hit small business owners hard. The city is becoming less and less friendly for small business owners,” commented Arora.

A survey that accorded national rankings to the top 25 cities in terms of best small business growth also saw New York losing its No.1 Spot in 2018 and slipping to No. 4 this year. The survey examined 30,000 companies in making the final rankings.

Again, New York was accorded the last position in an economic competitiveness data made by the American Legislative Exchange Council.

New York still No 1 in annual revenue

However, New York continues to be a topper in annual revenue for small business owners, followed by Miami, according to Biz2Credit.

A separate study by BizBuySell affirmed that cash flow among local New York businesses has been surging. The median cash flow increased to $146,670, from the 2018’s $135,340.

But the higher cash flow is not translating into gains like savings or reserves as higher taxes are draining out the money from the hands of businesses, analysts warned.

“New York is still the place where the revenues are highest,” said Arora.

Among the lucrative locations for relocation, New York business owners see Miami as the best bet. Of course, there are many other low-cost locations. Meanwhile, deals on high-end condos and business space in Miami are up and the buyers are mainly New York arrivals.

However, leading economists point out New York as a significant case study where high taxes and high productivity co-exist.

Nobel Prize-winning Economist Paul Krugman, while rebutting the criticism that higher tax disincentivizes work, pointed out New York City as an example where high tax rates never ebbed productivity.

“Does this city out here look to you like a place where people just don’t really work very hard because taxes are too high? It doesn’t strike me that way,” Krugman asked.