Study: Taxes a drag on small business.
Minnesota fared poorly in a new study ranking the states on small business friendliness.
The Small Business Policy Index 2014 rated Minnesota 46th in the nation for most entrepreneur-friendly states.
The index measures 42 factors regarding taxes, regulations, government spending and debt, and other government activities.
Categories where Minnesota did poorly include top personal income tax rates (47th in the country), top individual and corporate capital gains tax rates, top corporate income tax rates and unemployment taxes (all 48th). Minnesota fared better in rankings of workers’ compensation (tied for 12th) and crime rate (18th). It ranked seventh in state and local revenue from the federal government as a share of total state and local revenue, though that’s based on 2010-11 figures.
Overall, the index rated South Dakota best for entrepreneurs, and California last. Minnesota ranked 45th on 2013’s list, though the criteria has changed since then.
The study also linked the better performing states, on average, to better economic growth and population growth.
“Make no mistake, tax, regulatory, government spending, and other governmental performance and cost measures matter state by state,” Raymond J. Keating, SBE Council’s chief economist and author of the study, said in a statement. “Consider that when it comes to economic growth, population growth and shifts in population among the states, for example, the top 25 states on the index perform, on average, far better than the bottom 25 states.”
Is Minnesota a small business-friendly state? Tell us why or why not in the comments section below.