When It Comes to Business Taxes, Location Matters

March 1, 2012

Taxes are a big cost for many businesses, and vary widely based both on state and market sector. Now, for the first time, we have created a measurement of the bottom-line tax liability a firm would face doing business in each of the 50 states. In addition, the new study, Location Matters, measures the tax differences between companies in different industries and between new and existing companies within each state.

Location Matters: A Comparative Analysis of State Tax Costs on Business is a guide for anyone making decisions about new manufacturing facilities, corporate headquarter relocations, or state government affairs. It highlights the sometimes surprising differences in how different kinds of businesses are taxed within the same state.

Said Tax Foundation president Scott Hodge:

Corporate taxes on the state level rarely treat all comers equally, leading to sometimes dramatic disparities in the cost of doing business. Tax preferences and incentive deals can distort the playing field based on how long a business has been operating, whether it’s a manufacturing or retail operation or whether it’s moved from another state to set up shop.

The states which ranked best overall (for mature firms) were led by Wyoming at #1, followed, in descending order, by South Dakota, Georgia, Nevada, and Ohio. Lowest ranked states included Pennsylvania, which came in last at #50, followed by Hawaii, West Virginia, Kansas, and Rhode Island.

Read or download the new study here.


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