As Texas and other states make coordinated strategic moves to attract jobs beyond taxes, New York faces growing competitive pressure that cannot be ignored

The Partnership for New York City today released new analysis showing that, as city and state lawmakers move toward finalizing the city and state budgets, a narrow focus on tax policy risks missing the broader competitive shifts already reshaping where companies invest, hire, and expand.

“At a moment when growth decisions are increasingly mobile, tax policy cannot be viewed in isolation. New York is missing the bigger picture of what other states are deliberately doing as we just talk taxes,” said Steven Fulop, President & CEO of the Partnership for New York City. “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”

The report finds that leading competitor states are advancing coordinated economic strategies that extend well beyond tax policy.

Texas, in particular, has paired the absence of a business income tax with aggressive business incentives, a new specialized business court, and initiatives aimed at expanding capital markets activity. Since 2015, 314 companies have relocated headquarters to Texas and in 2024, Texas surpassed New York in financial services employment (excluding insurance and real estate).

The primary risk to New York is not a sudden wave of relocations but a steady drift of incremental hiring and investment.

Legislators are currently considering increasing the state’s top corporate income tax rate from 7.25% to 11.5%, which would bring New York City’s combined marginal corporate income rate to roughly 22.5% - among the highest of major domestic business centers.

“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.”

The Partnership is urging policymakers to adopt a broader competitiveness strategy that addresses structural cost drivers, regulatory predictability, workforce alignment, and capital markets strength alongside tax policy.

“The choice before city and state lawmakers is not simply whether to raise or not raise taxes, we are missing the bigger picture of how we are being picked apart,” Fulop said. “It is whether New York is prepared to compete in a landscape where other states are making coordinated moves to attract growth. 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 full report is available at pfnyc.org.