Last updated on May 13th, 2019 at 02:40 pm
The Tax Foundation, a Washington D.C.-based non-profit, non-partisan research and public education organization, monitors tax and fiscal activities at all levels of government. The foundation recently issued its 2007 state business tax climate index, which is designed to measure the competitiveness of each state’s tax system. According to the index, Wyoming has the best business tax climate and Rhode Island has the worst. Wisconsin ranked 38th best.
Curtis Dubay, an economist at the Tax Foundation and Chris Atkins, the foundation’s attorney wrote an executive summary for the foundation’s 2007 state business tax climate index.
“Good state tax systems levy low, flat rates on the broadest bases possible, and they treat all taxpayers the same,” they said in the executive summary. “State lawmakers are always tempted to lure business with lucrative tax incentives and subsidies. Lawmakers create these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for a woeful business climate plagued by bad tax policy. A far more effective approach is to systematically improve the business tax climate for the long term.”
State lawmakers need to remember two things, Dubay and Atkins said.
“(1.) Taxes matter to business. Taxes affect business decisions, job creation and retention, plant location, competitiveness, and the long-term health of a state’s economy. Most importantly, taxes diminish profits. Thus a state with lower taxes will be more attractive to business investment.”
“(2.) States do not enact tax changes (increases or cuts) in a vacuum. Every tax law will in some way change a state’s competitive position relative to its immediate neighbors, its geographic region, and even globally. Ultimately, it will affect the state’s national standing as a place to live and to do business. Entrepreneurial states can take advantage of the tax increases of their neighbors to lure businesses out of high-tax states.”
More information about the Tax Foundation’s business tax climate rankings is available at: www.taxfoundation.org/news/show/1923.html.
The 2007 state business tax climate rankings
(from best to worst):
2. South Dakota
7. New Hampshire
23. New Mexico
26. South Carolina
33. North Dakota
34. West Virginia
40. North Carolina
47. New York
48. New Jersey
50. Rhode Island