Mayor Bloomberg and his budget director, Mark Page, attracted attention in recent weeks with warnings that Governor Spitzer’s plan to “close loopholes” in corporate taxes would hurt New York City’s economy. They’re right, but the potential impact goes further — all throughout the state.

Take the banking and financial sectors, which the governor’s Executive Budget would hit especially hard. Finance is a key concern for New York City leaders because it provides so much of the fuel for the city’s economy.

“We compete to hold offices, employment and business transactions here,” Mr. Page told the City Council. “Increasing the cost of doing business,” he added, “can only hurt our attractiveness as a major business and financial center.”

New York City is unique in many ways, but banking and finance are increasingly important elsewhere in the state, too. One example: Buffalo. Historically a manufacturing center, the city on Lake Erie has a growing banking presence with major corporations such as M&T Bank and HSBC, and the Buffalo branch of the Federal Reserve Bank of New York. Citigroup announced last month it’s expanding operations just outside Buffalo, adding 700 good jobs there.

The conventional wisdom in Albany says the financial sector, in the city and upstate, has nothing to worry about — that “closing loopholes” simply means requiring corporations to pay their fair share. That idea is not only inaccurate — it’s beside the point.

A loophole is a provision that clever tax experts use in ways policymakers did not intend. But the tax laws at issue represent conscious choices by previous governors and legislators, who wanted to make New York’s taxes more competitive with those elsewhere. That’s just what New York, state and city, needs most.

One proposed change to the bank tax, for instance, would eliminate favorable treatment for business income related to employment in the state. It’s hard to argue that banks are taking advantage of a “loophole” when they use this provision of tax law — any more than homeowners shirk their fair share when deducting mortgage interest.

Repealing that provision would drive up banks’ costs for employment. All told, the Bankers Association of New York estimates the governor’s proposals would raise bank taxes statewide by nearly $1 billion, doubling the existing burden. There’s no way that banking companies could simply absorb such new costs. Some would be forced to raise customer charges, hurting entrepreneurs and consumers. Others would likely have to drop or shrink existing lines of business — and reduce employment at the same time.

Another supposed “loophole closing” in the governor’s budget would require that companies doing business here combine out-of-state revenue with in-state revenue in their New York tax returns. Such combined reporting would cost business taxpayers $215 million annually, according to the state Budget Division.

Why is that a bad move? New York City remains a national and global business center, with more Fortune 500 headquarters — 44 — than any other American city. Worldwide, only Tokyo and Paris are home to more of the largest international corporations. Forcing companies to include out-of-state income in a New York tax return would make it tougher to retain those impressive and economically important rankings.

Some critics say businesses in New York simply don’t pay their fair share of taxes. But, as Mr. Page told council members, our combined city and state taxes on corporate and bank net income constitute “by far the highest local tax burden of any jurisdiction in the country.”

The city’s Independent Budget Office — which, as the name implies, is separate from the mayor’s own budget staff — reached a similar conclusion in a February report. The office found that businesses in the city pay an effective tax rate nearly twice the average of the other nine biggest American cities.

Raising business taxes still higher would cause damage going well beyond the targeted corporations. Working New Yorkers would suffer with fewer jobs. As a result of that, in every borough of the city, long-struggling neighborhoods that are now enjoying newfound prosperity could risk losing their forward momentum and improved quality of life.

Governor Spitzer’s first budget includes major reforms that employers and other taxpayers can applaud. For instance, Mr. Spitzer is fighting a heroic battle against entrenched interests to modernize the health care system, which should help improve New York’s Medicaid program that now inefficiently spends billions of dollars. And he insists that an increase in education funding go hand-in-hand with increased accountability for results — another admirable initiative.

In the long run, our hopes for better education, health care, and other services depend on keeping New York’s economy strong. That, in turn, requires giving corporations and the financial sector good reason to stay and grow here.

Mr. Adams is president and chief executive officer of the Business Council of New York State, Inc.