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Tax Foundation's 2013 State Business Tax Climate Index

Mar 29Jeff Matthews

The Tax Foundation recently released their annual ranking, the Tax Foundation’s 2013 State Business Tax Climate Index.  All states are ranked based upon a number of criteria shown in the table below.

2013 State Business Tax Climate Index Ranks and Component Tax Ranks
State

Overall Rank

Corporate Tax Rank

Individual Income Tax Rank

Sales Tax Rank

Unemployment Insurance Tax Rank

Property Tax Rank

Alabama

21

17

18

37

13

8

Alaska

4

27

1

5

28

13

Arizona

25

24

17

50

1

5

Arkansas

33

37

28

41

19

19

California

48

45

49

40

16

17

Colorado

18

20

16

44

39

9

Connecticut

40

35

31

30

31

50

Delaware

14

50

29

2

3

14

Florida

5

13

1

18

10

25

Georgia

34

9

40

13

25

30

Hawaii

37

4

41

31

30

15

Idaho

20

19

23

23

47

2

Illinois

29

47

13

34

43

44

Indiana

11

28

10

11

11

11

Iowa

42

49

33

24

34

37

Kansas

26

36

21

32

9

28

Kentucky

24

26

26

9

48

18

Louisiana

32

18

25

49

4

23

Maine

30

41

27

10

32

39

Maryland

41

15

45

8

46

40

Massachusetts

22

33

15

17

49

47

Michigan

12

7

11

7

44

31

Minnesota

45

44

44

35

40

26

Mississippi

17

11

19

28

7

29

Missouri

16

8

24

27

6

6

Montana

8

16

20

3

21

7

Nebraska

31

34

30

26

8

38

Nevada

3

1

1

42

41

16

New Hampshire

7

48

9

1

42

43

New Jersey

49

40

48

46

24

49

New Mexico

38

39

34

45

15

1

New York

50

23

50

38

45

45

North Carolina

44

29

43

47

5

36

North Dakota

28

21

35

16

17

4

Ohio

39

22

42

29

12

34

Oklahoma

35

12

36

39

2

12

Oregon

13

31

32

4

37

10

Pennsylvania

19

46

12

20

36

42

Rhode Island

46

42

37

25

50

46

South Carolina

36

10

39

21

33

21

South Dakota

2

1

1

33

35

20

Tennessee

15

14

8

43

26

41

Texas

9

38

7

36

14

32

Utah

10

5

14

22

20

3

Vermont

47

43

47

14

22

48

Virginia

27

6

38

6

38

27

Washington

6

30

1

48

18

22

West Virginia

23

25

22

19

27

24

Wisconsin

43

32

46

15

23

33

Wyoming

1

1

1

12

29

35

Dist. of Columbia

44

35

36

42

48

24

Note: A rank of 1 is more favorable for business than a rank of 50. Rankings do not average to total. States without a tax rank equally as 1. D.C. score and rank do not affect other states. Report shows tax systems as of July 1, 2012 (the beginning of Fiscal Year 2013).
Source: Tax Foundation.

 

One interesting correlation came in a 3/28/13 article I read in the New York Times. 

“The New York Court of Appeals, the state’s highest court, denied a petition by Amazon and Overstock.com to exempt the companies from collecting sales tax from New York customers. Although the companies are not based in the state, the court ruled that they have affiliates in New York actively doing business in the state, and therefore purchases on the two companies’ websites should be subject to the sales tax law.” 

It would certainly appear that the economic climate in New York is impacted by the worst overall ranking by the Tax Foundation and a legal environment that is aggressively pursuing sales tax revenue from residents for internet purchases.  In addition, anyone who has worked with personal or corporate tax returns in New York will affirm the state has a very complicated filing process in comparison to many other states.

I am not familiar with Wyoming’s rules but having lived in Nevada and California, I will personally attest to the rankings the Tax Foundation gave each state.  Nevada is able to support this tax environment via a system of taxation on the gaming industry which this study did not incorporate.  I should note that Nevada’s unemployment now sits at 9.6% down from 11.8% in February 2012.  The state’s website for economic development, www.Diversitynevada.com  states:

“Nevada is an entrepreneurial haven for entrepreneurs, financiers and business executives. This is where business deals are struck, venture capital deals are developed and business networks are established.

Our embrace of limited government and personal freedom sets the stage for Nevada’s vibrant business culture. Inexpensive land and affordable housing are powerful lures for recruiting and retaining top-notch employees.”

I must admit to prejudice as Diversity Nevada is run by my former boss and friend, Steve Hill, who has assisted Governor Brian Sandoval in revamping the economic development approach taken by Nevada.

Interestingly, the State of California also announced this week that their unemployment rate fell to 9.6% with the addition of 41,200 jobs on population growth of 48,000.  11,200 of those jobs came from additional government workers while manufacturing dropped 3,300 jobs.

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