According to Tax Foundation, State Business Tax Climate Index enables corporate leaders, government policy developers and taxpayers to compare tax system in each state. Even though there are several ways to express the value of taxes that a state government collects, this index purpose is showing how the states have structured their tax system and provides improvement plans.
2023 Index top 10 states include:
- Wyoming
- South Dakota
- Alaska
- Florida
- Montana
- New Hampshire
- Nevada
- Utah
- Indiana
- North Carolina
High tax absence is a common factor in most of top 10 states. Property taxes and unemployment insurance are collected in every state, however there are several states that exempt one or more main taxes: corporate income tax, individual income tax or sales tax. Nevada, South Dakota and Wyoming do not have corporate or individual income tax (although Nevada enforces gross income tax).
Alaska does not have individual income tax or sales tax at state level. Florida does not have individual income tax. New Hampshire and Montana do not have sales tax.
However, that does not mean the state cannot be in top 10 while it collects every main tax. For instance, Indiana and Utah, that bill all main taxes, but with low rate on wide bases.
The 10 states with the worst performance in the ranking include:
- Alabama
- Rhode Island
- Hawaii
- Vermont
- Minnesota
- Maryland
- Connecticut
- California
- New York
- New Jersey
The 10 last states tend to have several common issues: complex and non-neutral taxes, with relatively high aliquots.
New Jersey, for instance, is troubled by some of the country´s highest tax burdens, it has the county highest corporate income tax aliquot and one of the highest individual income tax aliquots. What is more, the state has a particularly international income aggressive approach, it collects inheritance tax, and has one of the country´s most poorly structure individual income taxes.
The full ranking is available at: https://taxfoundation.org/2023-state-business-tax-climate-index/
Written by Marcos Ferreira, Content Assistant to Drummond Advisors
