Wyoming Best State for Business According to Tax Foundation

According to the 2008 State Business Tax Climate Index released by the Tax Foundation, Wyoming ranked first as having the best tax environment for businesses while Rhode Island ranked last. The top 10 states with the most "business friendly" tax system (stated highest to lowest) include: Wyoming, South Dakota, Nevada, Alaska, Florida, Montana, New Hampshire, Texas, Delaware, and Oregon. While the bottom 10 states include: Maine, Minnesota, Nebraska, Vermont, Iowa, Ohio, California, New York, New Jersey, and Rhode Island.

The 2008 State Business Tax Climate Index measures how well a state's tax system promotes investment by maintaining a broad tax base and low rates. The Index ranks how the 50 US states' tax system are business friendly based on the taxes that matter most to businesses and investors such as corporate tax, individual income tax, sales tax, unemployment tax and property tax. The index scores the states based on these taxes and weighted based on the impact of the tax to an industry.

The Tax Foundation's press release stated that a state can become competitive due to the quality of its tax systems, something which lawmakers have control over. The Index thus provides lawmakers with a guide in keeping their state's tax system competitive by pinpointing things that need to be changed in to order to improve their states' standing compared with competing states.

According to the Background Paper on the 2008 State Business Tax Climate Index, states need to improve their tax policy and not just lure investors with lucrative tax incentives and subsidies that might end badly in the long run as what had happened in Florida in 2004 when a credit card company decided to close its Tampa call center resulting in the laying off of 1,110 workers. Lawmakers were mad since the company had been lured to Florida because of generous tax incentive package amounting to nearly $3 million tax breaks in the previous nine years. According to the background paper, if states are offering such packages, it is most likely to cover up a business climate that is plagued with bad tax policy.

According to the co-author of the study, Curtis Dubay, states are competing with one another for companies, jobs, and people. "Taxes matter to businesses, and the states with better business tax climates will reap the rewards," Dubay says and added that all of the 50 states comprising the US needs to look for ways to improve their business class tax climate since if their tax systems is at a stand-still, they will be losing ground to states actively improving their tax climates.

The 2008 State Business Tax Climate Index has been published by the Tax Foundation since 2003 and includes historical data that shows how the states' rankings have changed over time. This year's Index will be formally unveiled at the State Policy Network's Annual Meeting, held in Portland, Maine, on Thursday, October 11.

SOURCE:

Tax Foundation, "Which States are Best for Business?" Taxfoundation.org

Tax Foundation, Background Paper: 2008 State Business Tax Climate Index. Taxfoundation.org