Which State Taxes are Best for Business?

February 27, 2006

The Tax Foundation released the much-anticipated third edition of our State Business Tax Climate Index this morning, which ranks the “business-friendliness” of the 50 state tax systems. Here’s the bottom line:

Major Components of the State Business Tax Climate Index, 2006

State

Overall

Rank

Business Tax Index Rank

Individual Income Tax Index Rank

Sales and Gross Receipts Tax Index Rank

Unemploy-ment Insurance Tax Index Rank

Wealth Index

Rank

Alabama

14

14

17

11

4

6

Alaska

3

48

4

1

43

18

Arizona

25

29

20

40

12

12

Arkansas

41

44

32

37

41

13

California

40

39

47

38

20

7

Colorado

12

6

14

26

21

14

Connecticut

39

16

19

33

26

50

Delaware

8

25

26

3

11

10

Florida

4

13

4

20

1

16

Georgia

21

8

27

7

32

27

Hawaii

33

26

44

43

22

3

Idaho

24

21

37

17

46

2

Illinois

23

15

13

41

37

44

Indiana

11

20

10

14

7

19

Iowa

42

46

45

13

28

29

Kansas

34

45

23

28

15

33

Kentucky

44

40

30

23

48

30

Louisiana

36

34

22

49

9

28

Maine

45

47

38

10

42

39

Maryland

22

7

39

8

17

37

Massachusetts

27

36

15

9

49

41

Michigan

26

49

11

32

40

20

Minnesota

38

41

36

34

35

15

Mississippi

29

33

16

46

2

26

Missouri

20

4

25

29

8

17

Montana

9

17

21

5

24

23

Nebraska

43

42

34

36

14

42

Nevada

5

1

7

47

38

11

New Hampshire

6

38

8

2

44

31

New Jersey

49

50

46

27

27

46

New Mexico

28

31

24

48

18

1

New York

50

30

50

39

47

43

North Carolina

37

22

43

35

5

40

North Dakota

31

35

42

18

36

4

Ohio

47

37

48

45

13

48

Oklahoma

17

8

28

15

3

21

Oregon

10

24

33

4

30

8

Pennsylvania

16

32

12

19

16

45

Rhode Island

48

27

40

30

50

49

South Carolina

30

12

29

12

45

32

South Dakota

2

1

1

42

31

9

Tennessee

15

11

9

44

33

38

Texas

7

18

4

21

6

34

Utah

18

5

31

24

23

5

Vermont

46

43

49

16

10

47

Virginia

19

8

18

6

25

36

Washington

13

19

2

50

39

24

West Virginia

35

28

41

31

34

22

Wisconsin

32

23

35

25

29

25

Wyoming

1

1

2

22

19

35

Note: Rankings do not average across to total. States without a given tax rank equally as number 1.

Click here for the full study. Click here for a response to recent criticisms of the Index.

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