Which States Are Best for Business? The 2008 State Business Tax Climate Index

October 10, 2007

Contact: Nate Bailey (202) 464-5102 nate@taxfoundation.org

Washington, DC, October 10, 2007 -  Today, the Tax Foundation released its 2008 State Business Tax Climate Index.  The Index ranks how "business friendly" the 50 state tax systems are, providing a roadmap for state lawmakers concerned with keeping their states tax-competitive.

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.

"There's no question that states are competing with one another for companies, jobs, and people," said study co-author Curtis Dubay.  "Taxes matter to businesses, and the states with better business tax climates will reap the rewards."

Dubay added, "States need to constantly be on the lookout for ways to improve their business tax climates. If they're standing still, they're losing ground to states actively improving their climates."

The Index ranks states based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment tax and property tax.   The states are scored on these taxes, and the scores are weighted based on the relative importance or impact of the tax to a business.

This year's Index will be formally unveiled at the State Policy Network's Annual Meeting, held in Portland, Maine, on Thursday, October 11 by study co-author Chris Atkins.

The Index has been published yearly by the Tax Foundation since 2003.  The full report includes historical data showing how the states have changed their rankings over time.

Rankings - The Top and Bottom 10 States in 2008

Top 10:

Bottom 10:

1. Wyoming

2. South Dakota

3. Nevada

4. Alaska

5. Florida

6. Montana

7. New Hampshire

8. Texas

9. Delaware

10. Oregon

 

41. Maine

42. Minnesota

43. Nebraska

44. Vermont

45. Iowa

46. Ohio

47. California

48. New York

49. New Jersey

50. Rhode Island

 

The full report, Tax Foundation Background Paper No. 57, and the full 50-state rankings, are available online at: http://www.taxfoundation.org/legacy/show/22658.html

The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.

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