(The Center Square) — New York is falling behind other states in overhauling its laws to attract new businesses, according to a new report, which warns of an exodus of employers unless lawmakers take steps to improve the state's competitiveness.
The new analysis by the group Partnership for NYC claims that as New York policymakers wrangle over tax policies, they are "missing the bigger picture" of the "coordinated strategic moves" other states are using to lure businesses away from the Empire State.
“The real issue is whether New York is aligned across taxes, regulation, workforce, legal structure, and capital markets to remain competitive in a rapidly shifting landscape and the honest answer is we are missing the bigger picture and instead playing into the exact deliberate traps of these other states," Steven Fulop, the group's president & CEO, said in a statement.
Fulop said the choice for New York City and state lawmakers is "not simply whether to raise or not raise taxes" but what they are doing to improve competitiveness with other states.
"It is whether New York is prepared to compete in a landscape where other states are making coordinated moves to attract growth," he said. "Governor Hochul understands this and she has made clear that additional tax hikes are unnecessary. Lawmakers should follow her lead and focus on keeping New York competitive for the long term."
The report comes as New York lawmakers are considering plans to increase the state’s top corporate income tax rate from 7.25% to 11.5%. Meanwhile, New York City Mayor Zohran Mamdani wants to increase taxes on the cities employers and top earners to reduce a projected budget deficit and fund his far-left agenda.
Both New York State and the city are consistently ranked last nationally for tax competitiveness and among the bottom states for starting a small business and for business growth, the report's authors noted.
"Raising rates may generate short-term revenue projections, but it does not solve the underlying affordability challenges facing employers," Fulop said. "Sustainable growth — and the tax base that comes with it — depends on maintaining an environment where companies choose to expand.”
By contrast, Texas has paired the lack of a business income tax with "aggressive" incentives, a new specialized business court, and initiatives aimed at expanding capital markets activity, the report's authors noted.
Since 2015, 314 companies have relocated headquarters to Texas from other states. In 2024, Texas surpassed New York in financial services employment, excluding insurance and real estate, the report said.
The report's authors said the main risk to New York is "not a sudden wave of relocations but a steady drift of incremental hiring and investment." They listed more than two dozen companies that relocated from New York to Texas from 2014 to 2024, ranging from financial service and life science companies to manufacturers and retailers.
In particular, Texas recently updated its legal system to mirror the business-friendly framework in Delaware, which is the legal home to about two-thirds of the Fortune 500 companies.
In a speech at Texas A&M University last week, Securities and Exchange Commission Chairman Paul Atkins recognized Texas for pursuing "an interesting alternative to Delaware, through a framework designed to attract companies with shareholders who are eager to get back to basics, with less politicization, abusive litigation, and overall drama."
"That vision is rooted in a deeply American idea: that competition — among firms; among markets; and yes, among States — is the animating force behind a system that has produced more prosperity than any other in human history," Atkins said in his remarks.
