Steep Taxes Harm City's Best Places To Trade Ranking

When it comes to stock trading, New York is only the third greatest city in the world because of its steep taxes and hefty real estate prices, according to the latest issue of Trader Monthly magazine.

New York trailed the top city, Chicago, and London, although the three were neck-and-neck, a senior editor at the magazine, Rich Blake, said.

"Real estate crushed London, but it was taxes that demoted New York to the bronze medal," Mr. Blake said. "Traders do care about money, and you can keep more of it in Chicago and London, for that matter."

The ranking, the first of its kind for the magazine, which launched in 2004 and is located in New York, was based on a combination of work and quality of life criteria. Taxes, for instance, accounted for 20% of each city's overall score, as did trading infrastructure.

Entertainment, nightlife, real estate, recreation, weather, access to capital, and time zones also were considered.

New York won perfect scores for entertainment, nightlife, access to capital, and trading infrastructure. It fell far short of the competition when it came to taxes, scoring eight points out of 20 for the category (Chicago scored 15 points and London pulled in 12).

When explaining the ranking, the magazine wrote that although Wall Street is synonymous with trading, the city failed to finish on top for two reasons: taxes and real estate.

"Trading, as you've perhaps heard, is about making money, and a burdensome multi-jurisdictional tax code undermines that goal," the report says. "The biggest drawback, however, is New York's perverse — and seemingly immune to gravitational force — real-estate market."

Deputy Mayor Daniel Doctoroff, a former investment banker at Lehman Brothers and managing partner at Oak Hill Capital Management, is quoted by the magazine as saying: "When it comes to competing globally in financial services, we face some regulatory and statutory issues — and those will be addressed."

He added that the city remains "the financial capital of the world."

The president and CEO of the Partnership for New York City, Kathryn Wylde, said the effect of the city's high state and city personal income tax rates cannot be overestimated.

"It's clear from the perspective of traders, personal income tax being charged by a city is a major disincentive," she said. "I guess it comes as no surprise that traders are no different than any of the other high end professionals that continually complain about personal income tax rates in the city and state."