ON-Lion Letter

The State Business Tax Climate Index, from the Tax Foundation in Washington, D.C., enables business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare.  While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems, and provides a roadmap for improvement.

The 10 best states in the newest Index, released in November, are:  1. Wyoming; 2. South Dakota; 3. Alaska; 4. Florida; 5. Nevada; 6. Montana; 7. New Hampshire; 8. Indiana; 9. Utah; and, 10. Texas.

"The absence of a major tax is a common factor among many of the top ten states," according to the Tax Foundation researchers.  "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 income tax, the individual income tax, or the sales tax.  Wyoming, Nevada, South Dakota, and Texas have no corporate or individual income tax (though Nevada and Texas both impose gross receipts taxes); 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.

"This does not mean, however, that a state cannot rank in the top ten while still levying all the major taxes," they note.  "Indiana and Utah, for example, levy all of the major tax types, but do so with low rates on broad bases."

The 10 lowest-ranked states in this year’s Index are: 41. Maryland; 42. Ohio; 43. Wisconsin; 44. Connecticut; 45. Rhode Island; 46. Vermont; 47. Minnesota; 48. California; 49. New York; and, 50. New Jersey.

"The states in the bottom 10 tend to have a number of afflictions in common:  complex, non-neutral taxes with comparatively high rates," the Tax Foundation says.  "New Jersey, for example, is hampered by 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."

The Lynde and Harry Bradley Foundation in Milwaukee supports the Tax Foundation.

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