Best and Worst States for Business Taxes

The Tax Foundation has released the newest edition of its State Business Tax Climate Index, which ranks from 1 (best) to 50 (worst) the tax systems of the 50 states. According to the press release, South Dakota comes out on top.

The Tax Foundation states that the goal of the report is to "focus lawmakers' attention on the importance of good tax fundamentals: enacting low tax rates and granting as few deductions, exemptions and credits as possible."

As might be determined from the name and mission statement, The Tax Foundation sees higher taxes as a deterrent to a healthy business climate:

From the report: "American companies often function at a competitive disadvantage in the global economy. They pay one of the highest corporate tax rates of any of the industrialized countries. The top federal rate on corporate income is 35 percent, and states with punitive tax systems cause companies to be even less competitive globally."

Predictably, highly-populated states with a density of cities (California, New York) rank low and cities where land is not at a premium (Wyoming, Alaska) rank highly.

Full Story: New State Business Tax Climate Index
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Michael Lewyn's picture
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surprising

I was surprised by how many low-tax states are in bad economic shape, most notably Florida and Michigan.

Now I get it!

This explains why so many businesses are in South Dakota, Alaska, and Wyoming (1, 2, and 3) rather than New York, California and New Jersey (50, 49, 48). It's their low tax rates, stupid!

Seriously, though, here in Maryland we've just been through a gubernatorial election where our state's "business-friendliness" was a major point of debate--or at least the Republican candidate did his best to make it one. I, for one, would rather live in a people-friendly place than a business-friendly place (I am, after all, a person and not a business). Sure, don't stifle small businesses and the innovation they drive, but I feel like "business-friendly" too often means "big-business-friendly," because those are the businesses with the clout to influence legislation.

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