Study Looks at Taxes Remitted By Business

March 10, 2009

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 tax 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


U.S. State Average


16.69%

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).


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