How business-friendly is your state?
April 17, 2009 by Jennifer AzaraPosted in: Benchmarking, Communication tips, IRS, Management issues, Special Report, Tax compliance
April 15 just passed, but your state tax responsibilities sure haven’t. Check out where your state ranks in a whole host of different taxes.
Of course, you probably feel the tax burden acutely. But to benchmark your experience against your peers’, the folks at the Tax Foundation recently released its “2009 Facts and Figures How Does Your State Compare?” report.
Take a gander.
Business Tax Climate
First, the big picture. Here are the ten best (and worst) states overall to run a business in, tax-wise.
| 10 Best | 10 Worst |
| 1. Wyoming | 1. New Jersey |
| 2. South Dakota | 2. New York |
| 3. Nevada | 3. California |
| 4. Alaska | 4. Ohio |
| 5. Florida | 5. Rhode Island |
| 6. Montana | 6. Maryland |
| 7. Texas | 7. Iowa |
| 8. New Hampshire | 8. Vermont |
| 9. Oregon | 9. Nebraska |
| 10. Delaware | 10. Minnesota |
Of course, that list doesn’t tell the whole story.
The tax climate index is comprised of a whole host of different types of business taxes. If your state scores particularly high (or low) on a specific tax type, it could skew your ranking.
To get a clearer picture, check out the rankings based on specific types of business taxes.
Corporate Tax
| 10 Best | 10 Worst |
| 1. Nevada | 1. New Hampshire |
| 1. Wyoming | 2. Delaware |
| 1. South Dakota | 3. Michigan |
| 4. Virginia | 4. Massachusetts |
| 5. Missouri | 5. Iowa |
| 6. Utah | 6. California |
| 7. Oklahoma | 7. Minnesota |
| 8. Georgia | 8. Maine |
| 9. South Carolina | 9. Texas |
| 10. Mississippi | 10. Pennsylvania |
Sales Tax
| 10 Best | 10 Worst |
| 1. New Hampshire | 1. Washington |
| 2. Delaware | 2. New York |
| 3. Montana | 3. Tennessee |
| 4. Alaska | 4. New Mexico |
| 5. Oregon | 5. Louisiana |
| 6. Virginia | 6. Arizona |
| 7. Kentucky | 7. Nevada |
| 8. Maine | 8. California |
| 9. Massachusetts | 9. Nebraska |
| 10. Maryland | 10. New Jersey |
Unemployment Insurance Tax
| 10 Best | 10 Worst |
| 1. Oklahoma | 1. Rhode Island |
| 2. Arizona | 2. Massachusetts |
| 3. Florida | 3. Kentucky |
| 4. Missouri | 4. Alaska |
| 5. Mississippi | 5. Michigan |
| 6. North Carolina | 6. Idaho |
| 7. Delaware | 7. New York |
| 8. Kansas | 8. Illinois |
| 9. Texas | 9. Nevada |
| 10. Louisiana | 10. South Carolina |
Property Tax
| 10 Best | 10 Worst |
| 1. New Mexico | 1. New Jersey |
| 2. Utah | 2. Connecticut |
| 3. Idaho | 3. Nebraska |
| 4. Arizona | 4. Pennsylvania |
| 5. North Dakota | 5. Ohio |
| 6. Colorado | 6. New York |
| 7. Indiana | 7. Massachusetts |
| 8. Delaware | 8. Rhode Island |
| 9. Hawaii | 9. Vermont |
| 10. Montana | 10. Illinois |
And if your state appears on one or more of these “worst” lists? It doesn’t mean you need to suggest pulling up stakes and searching for a new corporate headquarters.
But you might want to devote some extra time and even money to shoring up compliance in those areas.
For example, if your state is notoriously tough when it comes to sales tax, it might be worth investing in software to boost your company’s compliance. (It may even expose some areas where you could save money.)
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Tags: April 15, Business Tax Climate, Business taxes, State comparisons, Tax Foundations
April 17th, 2009 at 2:58 pm
It is interesting to read which states are business-friendly while others ranked as the worst. Did you know that BusinessWeek ranked Newark the best city in Delaware to start a business?
http://images.businessweek.com/ss/09/03/0327_smallcity_startups/9.htm
They use ZoomProspector date to determine this list– here is the link to the Newark page on ZoomProspector:
http://www.zoomprospector.com/CommunityDetail.aspx?id=6360&f=1
Here is the link to all the best cities across the U.S. to start a business:
http://images.businessweek.com/ss/09/03/0327_smallcity_startups/index.htm
April 20th, 2009 at 4:14 pm
These types of surveys are misleading. Tax rates do no equal business climate. Low income tax states are also low services states. I would love to see a study that correlates taxes with other measures such as median income. My oberservation has been that low state tax states tend to be net receivers of federal dollars. In other words they are subsidized by federal taxes to a degree that higher state tax states are not.