State Business Tax Environments — Tax Foundation 2012 Update

The Tax Foundation, a non-profit organization, is dedicated to educate taxpayers about sound tax policy and the size of tax burdens borne by Americans at all levels of government.  Each year they complete a comparative ‘tax friendliness’ to business for each state.  The 2012 State Business Tax Index can be viewed and downloaded  for the complete 56 page report.

In calculating the State Business Tax Climate Index, the Tax Foundation takes into consideration corporate taxes, individual income taxes, sales taxes, unemployment insurance tax and property taxes.  Each respective tax is not weighted equally as some taxes are not as onerous as others.  Weights  (supporting logic as to why are in the report) are as follows:

33.1 Percent Individual Income Tax
21.4 Percent Sales Tax
20.3 Percent Corporate Income Tax
14.1 Percent Property Tax
11.1 Percent Unemployment Insurance Tax

The 10 best states in the 2012 State Business Tax Index Include:

  1. Wyoming
  2. South Dakota
  3. Nevada
  4. Alaska
  5. Florida
  6. New Hampshire
  7. Washington
  8. Montana
  9. Texas
  10. Utah

It is surprising how quickly states can change rank as in 2011, Texas, for example, ranked 13th best and Washington was 11th.  Illinois, which was ranked 16th best in 2011, could muster just 28th best in 2012—obviously a state pressed for revenues.

The 10 worst State Business Tax Environments include:

  1. New Jersey
  2. New York
  3. California
  4. Vermont
  5. Rhode Island
  6. Minnesota
  7. North Carolina
  8. Wisconsin
  9. Maryland
  10. Iowa

The Tax Foundation also does a significant amount of other tax-related research.

Tell me what you think.

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