Which States Are Best for Business?(And the Worst!)

Tax Foundation ^ | October 11, 2006 | staff

[kellynla]

The State Business Tax Climate Index ranks how “business friendly” the 50 state tax systems are, providing a roadmap for state lawmakers concerned with keeping their states tax competitive. Since 2003, significant changes in a state's ranking, such as New Mexico and Maryland, reflect positive and negative changes in their state's tax system. (Read the full report at http://www.taxfoundation.org/publications/show/78.html.)

Keeping a state competitive in today’s global market can be difficult, but there is one factor lawmakers have direct control over: the quality of state tax systems. The Index measures how well a state’s tax system encourages investment by maintaining a broad tax base and low rates.

“Labor and capital are more mobile than ever,” says Chris Atkins, staff attorney and co-author of the Index. “In the global competition for jobs, no state can afford to be saddled with a tax system that unduly punishes new business investment.”

Rankings The ten best states in the Tax Foundation’s 2007 State Business Tax Climate Index are as follows:

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

The ten worst states in the Tax Foundation’s 2007 State Business Tax Climate Index are:

41. Minnesota 42. Maine 43. Iowa 44. Nebraska 45. California 46. Vermont 47. New York 48. New Jersey 49. Ohio 50. Rhode Island

[2banana]

Hmmm - how does that break down in red and blue states...?

[GSlob]

One would think that having #46 Vermont and #7 New Hampshire side-by-side would have drained all the business out of Vermont long ago - unless even so large differences in relative standing are in absolute terms marginal.

[Sister_T]

Ohio. Number 49 as one of the WORST! Why does this NOT surprise me?

Hopefully, Ohioans will make the right choice and elect Ken Blackwell as governor. Maybe then those numbers will turn around.

[alice_in_bubbaland]

As a NJ small business owner, I find it hard to believe that NJ is not first on the list of worst States.

Man, I gotta get out of here!

[RockinRight]

I fear that Ohioans are too stupid to realize that Ted Strickland will just make things worse...

[redgolum]

Nebraska is a red state, but has some of the highest taxes (and lowest cost of living).

[Brilliant]

That list seems about what I'd expect.

[Gay State Conservative]

The clueless voters of Massachusetts are about to elect a Governor who will,with the help of a Communist state legislature,propel the state straight down to 50th place

[crazyhorse691]

Oregon would rank #1 if Multnomah County and the City of Portlandistan weren't so business unfriendly.

[VirginiaConstitutionalist]

One common thread: Eight of the ten are not Right to Work states, including the six worst. Forced unionism means lost jobs and income.

[lormand]

Basically what you see here with a few exceptions is

Worse = Blue States

Best = Red States

[US Navy guy]

Iowa 44. Nebraska 45. I believe this, both will tax the blood from your veins if they could.

[franksolich]

It doesn't surprise me, Nebraska's very low, abysmal, rating.

For years and years and years, we had a state senator, a professional politician who couldn't hold a real job (or remain married), make fun of the fact that Nebraska used to be the "great white spot" of the union, with the lowest state taxes in the nation, great for business.

Well, while he was in the state legislature (I think 1979-1999), he changed all of that in a hurry.

The "great white spot" was based upon a series of electrical utility advertisements appearing in popular periodicals of the time, the late 1930s.

This state senator (later a one-term mayor of Lincoln, before marital problems befuddled him.....for the third time, and he is not exactly old) used to equate "high taxes" with "progress."

Well, during the late 1930s, when Nebraska was the "white spot," Mississippi had the highest per-capita state taxes in the country.....and for various reasons, I don't think Mississippi was exactly flourishing and prospering during the late 1930s, even with all of those taxes for "progress."

[230FMJ]

bump for later

[lormand]

Texas is # 6, but a few Texas Freepers think Texas has become a hell-hole worthy of some clown named Kinky Friedman to take the Governorship.

It won't happen though, Texas will re-elect Rick Perry, and Texas will continue to get better and better.

[epluribus_2]

Paging Governor Granholm, you must have forgotten to enter this contest, too. (Did not bother to court Auto factory when in Japan - went to nearby state)

Michigan is the state with the most stifling union chokehold on any sign of entrepreneurial spirit. Have to let the mob approve any new business and hire enough union donothings to send part of their checks to the poobahs. What a sorry mess of a state.

[shield]

California 45...wonder what it was ranked when Arnold took over as governor?

Wonder what it ranked when Reagan was governor?

[Dead Dog]

This is too cool, I've always considered Oregon if I wanted to start a business..if not just because I would like to move back. But I always considerd them to be as bad was Washington..without the Fuskies.

[chimera]

It is not surprising then that OH lags the average of the nation in figures like job growth, unemployment, and economic growth. The workman's comp system here is horrific, a genuine nightmare, i.e., a lawyer's paradise. The lack of economic growth here trends back to the 1970s. The pols and the electorate can't seem to understand a simple truth: punitive tax policies discourage business, and that causes economic growth to suffer.