George S. May Business Blog

Tax Foundation releases their 2010 review of “Which States Are Best for Business” — You may be shocked by the winner

From the Tax Foundation, “Which States Are Best for Business? 2010 State Business Tax Climate Index“:

The Tax Foundation just came out with a review in which it rates each state based upon its tax-system and how “business-friendly” it is. The review is rather long, so I won’t post it in its entirety, but here is a segment from the review that will give you a bit of info as to how the states are scored, which state topped the review, and which state rounded out the bottom.

“Washington, DC, September 22, 2009 – South Dakota has the most “business-friendly” tax system, and New Jersey has the least, according to the Tax Foundation’s 2010 State Business Tax Climate Index released today. The Index measures the competitiveness of the 50 states’ tax systems and ranks them accordingly based on the taxes that matter most to businesses and business investment: corporate income, individual income, sales, property and unemployment insurance taxes.

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. 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.

“When policymakers are considering tax changes in their states, they should remember two rules: Taxes matter to business, and states do not enact tax changes – increases or cuts – in a vacuum,” said Kail Padgitt, Ph.D., who authored Tax Foundation Background Paper No. 59, “2010 State Business Tax Climate Index.” The Index represents the tax climate of each state as of July 1, 2009, the first day of the standard 2010 fiscal year, and is available online at http://www.taxfoundation.org/research/show/22658.html.”

Some other notables from the review:

California – #48

Nevada – #4

Illinois – #30

Texas – #11

Florida – #5

New York – #49

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