A just-released ranking of states by their “tax-friendliness” to business finds Wyoming the most-friendly and New Jersey the least.
The annual ranking is produced by The Tax Foundation in Washington, D.C., a nonpartisan, pro-business research group that has been following and reporting on U.S. federal and state tax policy since 1937.
The 10 friendliest among the 50 states are, order of amorousness: Wyoming, South Dakota, Nevada, Alaska, Florida, New Hampshire, Washington, Montana, Texas and Utah.
The 10 with the most bilious tax policies, in descending order, are: Iowa, Maryland, Wisconsin, North Carolina, Minnesota, Rhode Island, Vermont, California, New York, and geddout-a-heah New Jersey.
New Jersey, says the Foundation, owes its anchor-man standing to its having the third-worst individual income tax rate, the fifth-worst sales tax, the 13th worst corporate tax and the second-worst property tax.
Ranking the 50 states isn’t easy, the Foundation admits. For each state, its tax index takes into account 118 different variables in five major areas of taxation: business taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes. The combination gives a state its overall ranking.
While every state levies taxes on property and on unemployment insurance, some choose not to levy one or more of the other major taxes. Wyoming, Nevada and South Dakota, for example, have no corporate or individual income tax. There’s no sales tax in either New Hampshire or Montana, and Alaska does not levy any state sales tax or individual income tax. Those states place well in the Foundation’s rankings.
Maryland, though in the bottom 10, rose in the rankings this year (from 44th to 42nd) because it eliminated its so-called millionaires tax, which had applied a rate of 6.25 percent to incomes of over $1 million.
Illinois, by comparison, dropped from 16th place last year 28th. In early 2011, it enacted a variety of new tax increases, including a 67 percent rise in the rate for personal income tax (from 3 percent to 5 percent). It also raised its corporate income tax from 7.3 percent to 9.5 percent. Businesses in Illinois, says the Foundation, now pay one of the highest corporate tax rates in the industrialized world.