Well, it's something that if you live in New York, you probably already know - taxes are high. Now, a new report says the state ranks lowest for tax climate in the nation. As our Sabina Kuriakose reports, it could be driving business away.

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TROY, N.Y. -- As Flavour Cafe owner Charlie Staats knows all too well, owning a small business can be a grind. But now, there's more evidence that New York State isn't make it much easier.

"It really affects the bottom line," said Staats of his tax burden.

A report by the nonpartisan Tax Foundation ranks New York as having the worst business tax climate in the nation. It says high taxes make New York less business friendly than other states.

"Taxes are a cost of doing business, and if taxes are especially high, then the cost of doing business is especially high," said E.J. McMahon of the Empire Center for New York State Policy.

The report grades states on five tax categories. New York ranked third worst for income tax, ninth worst for sales tax, and the worst for property taxes. Still, the Fiscal Policy Institute says more than just taxes affect the overall business climate, saying the state's economic problems are a result of the recession, and states need help from the federal government to overcome them.

In a statement, the FPI said, "The economic problems that New York and the other states currently face are the results of the severe recession that began in December 2007. Recognizing this fact is essential to understanding that dealing with the current economic situation requires forceful action by the federal government, and that the states can not on an individual basis overcome the national economic tide."

But McMahon said it all has to start with state leaders.

"We've got to be taking steps to reduce the cost of government. We've got to take steps to reduce public sector pay rolls and public sector compensation costs and to find ways of providing basic public services more efficiently and cost effectively," he said.

But, for now, it's the small businesses that say they're forced to cut.

"It's a vicious cycle. As long as taxes are high, how can you take on more people and pay their benefits?" said Jean Krueger of All Blues Sewing Service in Troy.

It's the same story echoing all across the state.

"You cut down on staff because that's one thing you can control, your labor," said Staats.

McMahon said what's needed right now is a property tax cap. He said voters should pay attention to where candidates for the state Legislature stand on the issue when they head to the polls.