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2013 State Business Tax Climate Index

November 1, 2012

2013 State Business Tax Climate Index

Source: Tax Foundation

The Tax Foundation’s 2013 edition of the State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare.

The 10 best states in this year’s Index are:

Wyoming

South Dakota

Nevada

Alaska

Florida

Washington

New Hampshire

Montana

Texas

Utah

The absence of a major tax is a dominant factor in vaulting many of these ten states to the top of the rankings. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate tax, the individual income tax, or the sales tax. Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.

The lesson is simple: a state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal.

The 10 lowest ranked, or worst, states in this year’s Index are:

Maryland

Iowa

Wisconsin

North Carolina

Minnesota

Rhode Island

Vermont

California

New Jersey

New York

Despite moderate corporate taxes, New York scores at the bottom this year by having the worst individual income tax, the sixth-worst unemployment insurance taxes, and the sixth-worst property taxes. The states in the bottom 10 suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.

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Categories: business and economics, lists and rankings, Tax Foundation, taxation
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