NCPA - National Center for Policy Analysis


October 27, 2009

Doing business in New York City has rarely been easy for the nearly 200,000 small firms that form the local economy's backbone.  But in the last few years, small businesses' woes have worsened, say entrepreneurs and business groups.  Taxes, fees and fines are higher than ever; city departments have stepped up inspections; and commissioners have promoted social policies that have added to their burdens, says Steven Malanga, the senior editor for the Manhattan Institute's "City Journal."

Government-imposed barriers to doing business raise prices, narrow choices and inhibit job growth for all New Yorkers, owners point out.  Mayor Bloomberg's tenure has been surprisingly tough on them, says Malanga: 

  • Owners got a glimpse of what was ahead right after Bloomberg took office, when the city began vigorously enforcing an obscure 1962 ordinance that limited the inscriptions on a store's awning; aggressive inspectors smacked shops with $400 fines until media attention and a public outcry prompted the City Council to rewrite the outdated law.
  • Far harder for businesses to survive, however, are steep recent tax hikes, especially the mayor's 2003 $1.9 billion property-tax increase, which fell disproportionately on businesses.
  • Along with aggressive reassessments of building values, the levies have almost doubled the city's real-estate tax bite, from $8.6 billion in 2002 to $16.1 billion this year, with business paying half the toll.

One result: Many more instances of businesses shuttering, owing tens of thousands of dollars in property taxes.  Bills like these have helped push up retail vacancy rates, now projected to hit double digits in the city by the year's end, says Malanga.

Also, the city's fines, fees, overlapping regulations and licensing requirements provoke nearly as much ire as taxes do, say Malanga:

  • This year, the city is projecting $900 million in fines and fees from residents and businesses, a whopping $100 million rise.
  • One example: The Consumer Affairs Department requires licenses for 55 types of businesses and fines those that don't have them.

Source: Steven Malanga, "Behind NY's small-business drop," New York Post, October 27, 2009.

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