BUFFALO, N.Y. (WIVB) – New York State is ranked among the worst in the nation when it comes to its business tax climate.

According to the Tax Foundation, based in Washington, D.C., New York has an overall ranking of 49 out of 50, just above New Jersey.

The Tax Foundation analyzed some key taxes including corporate, individual income, sales, unemployment insurance and property taxes.

The business tax climate index is designed to show how well states structure their tax systems, according to the organization.

“There’s a better and worse way to raise a dollar. You want to do so in a way that’s neutral, that doesn’t pick winners and losers that allows your economy to grow,” said Jared Walczak, senior policy analyst for the Tax Foundation.

“That’s what we’re trying to measure with the state business tax climate index, comparing the states against each other on those measures.”

The index shows that New York has made significant improvement to its corporate tax rate, dropping from 7.1 percent to 6.5 percent, according to Walczak. But he says it wasn’t enough to boost the overall ranking.

The state’s acting commissioner of taxation and finance, Nonie Manion, recently testified before a budget hearing in Albany.

She told lawmakers that Governor Andrew Cuomo has transformed the business climate.

“New York now has the lowest corporate tax rate since 1968 and the lowest manufacturers’ tax rate since 1917, Manion told lawmakers last month.

She said the tax cuts will save businesses over $7 billion over the course of Cuomo’s two terms.

Additionally, Manion pointed out that the state has taken steps to combat growth in property taxes.

“The state’s 2 percent property tax cap, enacted in the governor’s first year in office, is estimated to have lowered property taxes by an average of $2100,” Manion said.

“This was followed by the enactment of real property tax relief credits that will provide an additional $1.3 billion in property tax relief, with an average credit of $530 by 2019,” she added.

Greg Biryla, executive director of Unshackle Upstate, said despite the progress, New York is still one of the most difficult places in the nation to do business.

“It’s not to say some good things aren’t happening, particularly here in Western New York, but we have a long way to go before we can consider ourselves to be nationally let alone internationally competitive,” said Biryla.

“When it comes to the tax and business environment, if there’s a comparison being made we often come out on the short end,” Biryla added.

According to the Tax Foundation, states with the best tax systems will be the most competitive at attracting new businesses, and most effective at generating economic and employment growth.

“There are a lot of reasons why people want to live in New York and work in New York, but nonetheless, the state is holding its economy back,” said Walczak. “I think you especially see this perhaps in upstate New York.”

According to the Buffalo Niagara Partnership, compared to Erie County, the nation’s private sector is gaining jobs nearly three times as fast.

“The tax climate here is abominable,” said Dottie Gallagher-Cohen, president of the Buffalo Niagara Partnership.

While she credits Governor Cuomo for his focused attention on the region, she’s not bullish about the existing economic structure.

“If we want to grow jobs and investment here, we have to be competitive. And if you’re 49th out of 50 on taxes and you have an excessive regulatory environment, that’s a very tough challenge,” said Gallagher-Cohen

“We are really at the worst of the worst of the worst, 47th or 48th in high property taxes and individual income taxes which is how we get to this 49th ranking overall,” she said.

While it may not be the biggest factor, a state’s business tax climate is certainly something that companies consider, according to Steven Elwell, vice president of Level Financial Advisors in Amherst.

“Companies that are making those type of decisions, they look at things like this. In fact, the report cited several companies that had left states like Massachusetts or Virginia to go to other places; specifically citing the business tax climate was more favorable in a different state,” he said.

Elwell believes attacking individual income, property tax and sales tax rates would be the most impactful in attracting more business and boosting the state’s tax climate ranking.

“You would want to know what type of impact is this going to have on my employees because I want to ensure that they’re going to be able to be financially successful because if they’re not, that may affect their work performance,” he said.

During his State of the State message last month, Governor Cuomo said that upstate New York is no longer treated as the “forgotten stepchild of Albany,” and that there’s been a lot of progress across New York in terms of growth and lower taxes.

“Every New Yorker’s tax rate is lower today than when I took office,” Cuomo told a gathering of the state lawmakers.

“We have created more jobs than any administration in 75 years,” he added.

Frederick Floss, chairman of the Economics Department at Buffalo State College, thinks New York is in a much better spot than what’s portrayed by the Tax Foundation index.

For example, he says states that don’t have income tax will rank higher.

“It’s not really a true comparison. What it really is, is a comparison of what states have rich people in it. Therefore, those states use income taxes, and therefore you get a low rating versus other states,” Floss said.

“I think if you look at incomes in New York State, incomes are growing. So that to me would be a much better index of whether we’re doing well or not.”

While there’s been a resurgence of economic development across the state in places like Buffalo that had been starving for attention, Dottie Gallagher-Cohen says for the Buffalo-Niagara region to stay competitive more needs to be done.

“There is no question that this region is in a much better place than it was ten years ago, even five years ago,” said Gallagher-Cohen. “Much better place compared to ourselves. Where we need to get is to be competitive compared to other regions, and we’re not there yet.”