October 6, 2008
Which States Are Best for Business? 2009 State Business Tax Climate Index
Washington, DC, 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.
The top ten states in the Index, from 1st to 10th, are Wyoming, South Dakota, Nevada, Alaska, Florida, Montana, Texas, New Hampshire, Oregon, and Delaware. The bottom ten states, from 41st to 50th, are Minnesota, Nebraska, Vermont, Iowa, Maryland, Rhode Island, Ohio, California, New York and New Jersey.
Barro urges states to constantly be on the lookout for ways to improve their business tax climates. If they stand still, they lose ground to states actively improving their climates.
"States do not enact tax changes (increases or cuts) in a vacuum," Barro explains. "Every tax law will in some way change a state's competitive position relative to its immediate neighbors, its geographic region, and even globally. Entrepreneurial states will seize opportunities to lure businesses out of high-tax states."
This year's Index will be formally unveiled at the New Jersey State House in Trenton, NJ on Monday, October 6 by Josh Barro. Scheduled is a briefing to interested Garden State lawmakers at 9:00 AM, and a press conference at 11:00 AM. Details will be provided through a media advisory from the Tax Foundation.
The Index can be found at http://www.taxfoundation.org/research/show/22658.html.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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To schedule an interview to discuss Tax Foundation's 2009 State Business Tax Climate Index, please contact Matt Moon, the Tax Foundation's Manager of Media Relations, at (202) 464-5102.