Anderson Economic Group has released its third annual report ranking the states on business tax burdens. The report looks at 2006 data on taxes where the legal incidence falls on business. Economic incidence should be kept in mind: all business taxes are paid by individuals (whether they be consumers, shareholders, or employees). But looking at legal incidence, as this study does, shows how much states cloud the true taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. burden through indirect taxes like business taxes.
Here are the top 10 and bottom 10 rankings the study came up with:
|
States with Lowest and Highest Incidence of Taxation on Business (note: FY 2006 data) |
||||||
|
Lowest Ten States |
Highest Ten States |
|||||
|
% |
Rank |
% |
Rank |
|||
|
North Carolina |
10.88% |
1 |
North Dakota |
20.32% |
42 |
|
|
Delaware |
11.03% |
2 |
West Virginia |
20.48% |
43 |
|
|
Tennessee |
12.01% |
3 |
Florida |
20.67% |
44 |
|
|
Ohio |
12.01% |
4 |
District of Columbia |
23.21% |
45 |
|
|
Missouri |
12.10% |
5 |
New Hampshire |
23.44% |
46 |
|
|
Louisiana |
12.22% |
6 |
Hawaii |
23.82% |
47 |
|
|
Alabama |
12.57% |
7 |
Alaska |
25.72% |
48 |
|
|
Minnesota |
12.58% |
8 |
Vermont |
26.45% |
49 |
|
|
South Dakota |
12.60% |
9 |
Maine |
27.40% |
50 |
|
|
Connecticut |
12.63% |
10 |
Montana |
30.61% |
51 |
|
|
|
|
At their release conference call this morning, the authors graciously complimented our State Business Tax Climate Index, which ranks the states on how their tax structure relates to principles of sound tax policy. The two studies look at different aspects of a similar issue.
Another useful study is put out by the Council on State Taxation (COST), which estimates business tax burdens for the current year while also including sales taxes paid on manufacturing inputs (which is not included in the AEG study).
Share this article