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Tax Foundation Publishes State Business Tax Climate Index

Author: Scarinci Hollenbeck, LLC

Date: November 3, 2014

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The Tax Foundation, a think tank that tracks taxation issues, has released its latest ranking of states by business tax climate.

The Tax Foundation, a think tank that tracks taxation issues, has released its latest ranking of states by business tax climate.

According to the Tax Foundation, Wyoming is the most favorable state in which to do business. This was followed by South Dakota, Nevada, Alaska and Florida to round out the top five. The organization stated that among its top states, the absence of a major tax is a common factor. Wyoming, Nevada and South Dakota, for example, have no corporate or individual income tax. Those that did levy all of the major taxes on the top ten list did so at a low rate.

The least favorably ranked states suffered from “complex, non-neutral taxes with comparatively high rates,” according to the foundation. Topping the nclist was New Jersey, followed by New York, California, Minnesota and Vermont.

Nominally, the Tax Foundation is non-partisan, but many have criticized the organization as having a conservative bias. Its rankings have a tendency to vary more wildly from year to year than tax laws in those states, and some have suggested that the rankings in the state seem to have less to do with

Analysis conducted by Governing found that there was virtually no correlation between the employment-to-population ratio in a state and the business tax climate score. Similarly, there was a slight negative correlation between a state’s median annual wage and business tax climate score, meaning that residents of states with more favorable business climates were slightly more likely to make less money in a year.

What is clear is that taxation issues aren’t the only factor in determining the prosperity of a state. As economic issues becomes increasingly important to the American populous, many will pay attention to how these states do relative to their index scores.

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