Wyoming Tops List, While New Jersey Ranks Last
According to the latest data from the Tax Foundation’s annual State Business Tax Climate Index, this year Wyoming is the most business-friendly state in the US when it comes to tax burden. The other states rounding out the top 10 for favorable business taxation policies were South Dakota, Alaska, Florida, Nevada, Montana, New Hampshire, Indiana, Utah, and Texas. The Tax Foundation explained that their index “is designed to show how well states structure their tax systems.” In the case of the 10 best states for taxes, “the absence of a major tax is a common factor,” the Faoundation said, such as a lack of corporate or personal income tax or state-level sales tax. The exceptions to this are Indiana and Utah, which still “levy all of the major tax types, but do so with low rates on broad bases.” Conversely, the states ranked the worst in terms of taxes “have a number of afflictions in common: complex, non-neutral taxes with comparatively high rates.” The worst state for business taxes is New Jersey, followed by New York, California, Minnesota, Vermont, Rhode Island, Connecticut, Wisconsin, Ohio, and Maryland. The Foundation said that in New Jersey’s case, the state has “some of the highest property tax burdens in the country, is one of just two states to levy both an inheritance tax and an estate tax, and maintains some of the worst-structured individual income taxes in the country.” In an editorial, the Wall Street Journal pointed out that the top states in the ranking tend to be politically conservative states. The Journal argued, for example, that Illinois’ marked improvement from 31st to 23rd in the rankings this year was thanks to Republican Gov. Bruce Rauner’s decision to allow income and corporate tax rates to relapse to pre-hike levels.
What This Means For Small Businesses
Tax burdens affect small businesses at a disproportionate rate. Rankings like this one from the Tax Foundation can aid would-be small business owners in determining where to locate their businesses, and can help current small business owners get a grasp of the tax landscape in their state compared to other locations across the US.
Additional Reading
The Baton Rouge (LA) Business Report, the Lincoln (NE) Journal Star, and the New Jersey Local News also covered the Tax Foundation report.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
