Which States Are Best for Business? 2009 State Business Tax Climate Index

October 6, 2008

Wyoming has the best, and New Jersey has the worst, tax systems when it comes to “business friendliness,” according to the Tax Foundation’s recently completed 2009 State Business Tax Climate Index, a ranking of the 50 state tax systems that provides a roadmap for state lawmakers concerned with keeping their states tax-competitive.

Keeping a state competitive in today’s global marketplace 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.

“The modern market is characterized by mobile capital and labor. Therefore, companies will locate where they have the greatest competitive advantage,” said Tax Foundation Staff Economist Josh Barro, the study’s author. “States with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth.”

The Index, published yearly by the Tax Foundation since 2003, 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.

Read the 2009 State Business Tax Climate Tax Index.

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