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.

[piytar]

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

Not going to happen. Taft has royally SUCKED. Even though Blackwell fought against Taft basically every step of the way for the past term, all people are sawing is, "Oh, Gawd, the Republican sucked, let's not elect another one!"

Strickland is going to be an utter disaster, but at this point, I think an unavoidable one...

[domenad]

Florida at #5 is 90% the work of Jeb Bush. Too bad there is so much caterwauling about his brother, Jeb would be a damn good president.

[MindBender26]

Florida is great. They leave us alone.

California? 12 years to build any manufacturing plant with all the environmental baggage, and by that time, plant is 6 years obsolete!

[RockinRight]

The red states on the list, like Ohio, are marginally red states with heavy union influence. Doesn't explain Nebraska though.

[timpad]

Ping!

[paratrooper82]

State of Michigan ranks the worst on Taxes on Corporations, at #50!

Hurry up and vote for the Canadian Socialist liberal Granholm. "You just wait in five years!"

No one in Michigan has a job NOW! And, Corporations are leaving in droves Mrs. Granholm! We cannot afford to wait for another five years!

[paratrooper82]

"California? 12 years to build any manufacturing plant with all the environmental baggage, and by that time, plant is 6 years obsolete!"

Not to mention broke!

[BelegStrongbow]

nc ping: we're 40th, or just good enough to be not the very worst.

Not very promising, come to think of it.

[paratrooper82]

All of that, and then you have to pass the environmental Nazi's and then the smoking Nazi's, and then you file for bankruptcy because more than 10 years have passed, and you still can't get your private business off the ground.

[bybybill]

Somebody is smoking some REALLY good stuff. OreGONE is a terrible place for any small business.In fact, Oregon has a law that says you must become a smaller business each year. (Nike is in violation)

[Adiemus]

Texas will re-elect Rick Perry, and Texas will continue to get better and better.

The choices for governor on the ballot this year are all horrible, IMHO. I will not vote for Perry because he favors more toll roads that already hit me in the pocket every time I drive to work. His current ads touting him as tough on the border are a joke. He did nothing about the border until he saw it was going to be a political issue. And I am against his privatizing the corridor as well. However, he has been great for business here - a positive for him. I wish we had a real conservative to vote for, but Perry is probably the closest. This year, I'll abstain in the governor section of the ballot.

[wjcsux]

You mean to tell me that the radio ads telling me that Michigan is a great place for me to re-locate my business aren't true?

[paratrooper82]

I apologize for this post, because I don't have a dog in this hunt, but, I have to ask, why would you abstain from voting for governor, possibly handing the democrat a win, someone you obviously really don't agree with either. Are you tryng to punish the Republican for being a RINO? I guess I don't understand giving the liberal socialist who have campaigned on the issue of open borders, amnesty for every illegal that is already in our Country, and they don't believe Americans should be able to own guns at all.

Again, I am sorry for sticking my nose where it does not belong, I am trying to understand this kind of thinking is all.

[wolfcreek]

Texas is # 6


We'll see where Texas stands after Perry's business tax goes into effect. In the Austin area, every new corporation that moves to town gets out of paying taxes for 10 or 15 yrs. and the property owners get to make up the difference. Perry's not fooling me.

[WinOne4TheGipper]

7 on the first list went for Bush, only three on the second list.

[brooklin]

I would have thought that the new health care plan that was passed in Ma. would have already done that. It seems to be even worse than Maines Dirigo health plan.(which is a failure)

[Big Horn]

I know this for a fact. Wyoming is very Republican. This is one reason I moved here.

[Almondjoy]

Oregon won't be that way for long with the way our current Governor is talking.

Heck I am even surprised it is that way now.

[Gay State Conservative]

would have thought that the new health care plan that was passed in Ma. would have already done that.

Certainly a reasonable assumption on your part...but the law hasn't gone into effect yet.

[VOA]

bump

[paratrooper82]

I have lived in Michigan all of my life. I am currently in the US Army 82nd ABN recouping from injuries. I can tell you, unless you give up all of your independent decision making ability to both the State, then the Feds, and then the 501 c (3) environmental extremist who will be on you like stink on sh-t, you will not have a chance in hell of making it.

Currently in my small town, they just passed a anti smoking ordinance that will add to the cost of doing business in Michigan by 100%. Example, the State allows a private business to use existing ventilation system, and decide where to place "no smoking area." The new ordinance makes the small business owner provide a nonsmoking business and requires the business owner build a separate smoking room, with a separate and independent ventilation system to be approved by the local health department. Failure to follow the law and you could be fined 500.00 dollars each violation, and each day of the violation is a separate violation. you do the math! That is at the local level. Georgia Pacific just pulled out with 210 jobs because they could handle the continued micro management of private business at the local level. Second Chance just went bankrupt here in Central Lake.

I wish you all the luck in the world, but, remember, this is a Union State also.

[newgeezer]

43. Iowa

Thanks, Governor Vil-tax!

It may get worse before it gets any better. Looks like we'll elect another Dem governor, and the Republicans could lose both houses of the state legislature.

[Beelzebubba]

I don't see how a state with 9% income tax can be considered "business friendly."

[Beelzebubba]

9% income tax. And worse if you are in Portland Metro.

[Zhangliqun]

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 -

Maybe it pretty much did happen -- maybe 30 years ago they were #25 and #26.

[lormand]

"Perry because he favors more toll roads that already hit me in the pocket every time I drive to work."

Take another road, or take the access road. Nobody is forcing you to take a toll road.

"This year, I'll abstain in the governor section of the ballot."

Chalk one up for the RATs.

[brooklin]

When will that new health law take effect?

[lormand]

"We'll see where Texas stands after Perry's business tax goes into effect."

Bookmark this page, and view it a year, or 2 years from now. Then compare the "state" of the State with today.

I'm positive that Texas will be even greater, and all the people with Perry Derangement Syndrome can ask for forgiveness. I will be showing the malcontents the exit sign out of Texas.

[wjcsux]

Thank you for your service to our country. I pray that you make a full and complete recovery.
I wouldn't re-locate to any of the rust-belt states to save my life! I was stationed at Wright-Patterson AFB, Ohio in the mid 70's. This was the second time I had ever been east of the Mississippi my entire life. I saw how the unions and the state and local governments bled businesses dry.
I have heard several radio ads on our local Clear Channel affiliate advertising Michigan as a great state to do business. All you need to do is go to Detroit once. This would certainly change your mind.
Does DeVos have much of a chance of being elected?

[Amerigomag]

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

Above the worst ten category

On the other end of the spectrum, the ten tax systems least hospitable to business in 2004 are found in Hawaii, New York, Minnesota, West Virginia, Rhode Island, Vermont, Kentucky, Arkansas, Maine and Wisconsin.

No surprise. Downhill since the Austrian took office. Liberals do not nurture hospitable tax environments for business.

Under the Austrian, Californian's suffer the highest, per capita ,tax burden in the golden state's history.