2017 State Business Tax Climate Index

2017 State Business Tax Climate Index

By Jared Walczak, Scott Drenkard, and Joseph Henchman

PRINCIPLED INSIGHTFUL ENGAGED

ISBN: 978-1-942768-12-8

? 2017 Tax Foundation 1325 G Street, NW, Suite 950

Washingtion, D.C. 20005 202.464.6200



EXECUTIVE SUMMARY

TAX FOUNDATION

Executive Summary

The Tax Foundation's State Business Tax Climate Index 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 this year's Index are:

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

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

41. Louisiana 42. Maryland 43. Connecticut 44. Rhode Island 45. Ohio 46. Minnesota 47. Vermont 48. California 49. New York 50. New Jersey

2017 State Business Tax Climate Index

#17

#10 #20

#6 #1

#5

#9

#48

#16

#21

#35

#3

VT #47

NH #7

#29

#2 #25

#22

#46 WI #39

#40

#23

#15

#49

#12 #24

#45 #8

#18 #33 #34

#31

#38

#13

#11

#37

#28 #32

#36

#14

#41

#4

#30

MA #27

RI #44

CT #43

NJ #50

DE #19

MD #42

DC (#47)

#26

Note: A rank of 1 is best, 50 is worst. Rankings do not average to the total. States without a tax rank equally as 1. DC's score and rank do not affect other states. The report shows tax systems as of July 1, 2016 (the beginning of Fiscal Year 2017).

Source: Tax Foundation.

10 Best Business Tax Climates 10 Worst Business Tax Climates

TAX FOUNDATION

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EXECUTIVE SUMMARY

STATE BUSINESS TAX CLIMATE INDEX

The absence of a major tax is a common factor among many of the top ten states. 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, and South Dakota have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire, Montana, and Oregon 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. Indiana and Utah, for example, levy all of the major tax types, but do so with low rates on broad bases. The states in the bottom 10 tend to have a number of shortcomings in common: complex, nonneutral taxes with comparatively high rates. 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.

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TAX FOUNDATION

EXECUTIVE SUMMARY

Table 1.

2017 State Business Tax Climate Index Index Ranks and Component Tax Ranks

Alabama Alaska

Overall Rank 32 3

Corporate Tax Rank

14

27

Individual Income Tax Rank

22

1

Sales Tax Rank

48

5

Unemployment Insurance Tax Rank

14

29

Property Tax Rank

16

22

Arizona Arkansas

21

19

19

47

13

6

38

40

29

44

30

24

California Colorado

48

33

50

40

16

15

16

18

16

39

42

14

Connecticut Delaware Florida Georgia Hawaii

43

32

37

27

21

49

19

50

34

1

3

20

4

19

1

28

2

10

36

10

42

33

35

21

26

11

31

23

24

17

Idaho Illinois

20

24

23

26

46

2

23

26

10

35

38

46

Indiana Iowa

8

23

11

10

10

4

40

47

33

21

34

40

Kansas Kentucky

22

39

18

30

11

19

34

28

30

13

48

36

Louisiana

41

36

27

50

9

30

Maine

30

41

25

8

44

41

Maryland

42

21

46

14

26

42

Massachusetts

27

37

13

18

49

45

Michigan

12

8

14

9

47

25

Minnesota

46

43

45

25

28

33

Mississippi

28

12

20

38

5

35

Missouri Montana

15

5

28

24

7

7

6

13

21

3

19

9

Nebraska Nevada

25

29

24

12

8

39

5

34

1

41

43

8

New Hampshire

7

46

9

2

41

43

New Jersey

50

42

48

45

25

50

New Mexico

35

25

35

42

17

1

New York

49

7

49

43

32

47

North Carolina

11

4

15

19

6

31

North Dakota

29

16

36

34

15

3

Ohio

45

45

47

29

4

11

Oklahoma Oregon

31

9

38

36

1

12

10

35

32

4

33

18

Pennsylvania Rhode Island

24

44

17

20

45

32

44

31

39

22

50

44

South Carolina

37

15

41

31

37

26

South Dakota

2

1

1

32

40

23

Tennessee Texas

13

22

14

49

8

46

23

29

6

37

12

37

Utah

9

3

12

17

22

5

Vermont

47

38

44

16

20

48

Virginia

33

6

40

11

39

28

Washington

17

48

6

49

18

27

West Virginia

18

17

26

15

27

13

Wisconsin Wyoming

39

30

43

1

1

1

7

36

34

6

31

38

District of Columbia

47

31

43

33

27

47

Note: A rank of 1 is best, 50 is worst. Rankings do not average to the total. States without a tax rank equally as 1. D.C.'s

score and rank do not affect other states. The report shows tax systems as of July 1, 2016 (the beginning of Fiscal Year

2017).

Source: Tax Foundation.

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