According to the Tax Foundation’s 2018 State Business Tax Climate Index, California ranked 48th for its tax competitiveness, the same as last year’s ranking.
The Foundation’s annual index is designed to help business leaders, government policymakers, and taxpayers determine how their state’s tax system compares to others.
Here’s how California rated on all metrics:
Corporate tax: 32nd
Individual income tax: 50th
Sales tax: 41st
Unemployment insurance tax: 13th
Property tax: 13th
The only states trailing California were New York and New Jersey, at 49th and 50th, respectively.
The study authors pointed out that various tax increases lead to this year’s drop in competitiveness.
“In 2016, voters approved a twelve-year extension of the income tax provisions, but the ballot measure (Proposition 55) permitted the sales tax increase to expire, with the state rate reverting to 7.25 percent,” according to the study’s authors. “California also adopted a sizable increase in its cigarette tax, bringing the tax per pack from $0.87 to $2.87 and, coupled with local sales tax increases, dropping the state one place on the sales tax component of the Index.”
