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Tuesday, April 15, 2008

Some States are Better Than Others on Taxes

When Tax Day rolls around, taxpayers are naturally focused on how much of their paycheck goes to the government. Perhaps if you’re lucky, a federal refund is on the way. Where you live – or operate a business – can profoundly impact how much money you send to government at the state and local level as well. Some states are obviously better than others when it comes to the level of taxation they impose on businesses and individuals.

That is why the Small Business & Entrepreneurship Council (SBE Council) published the "Business Tax Index 2008: Best to Worst State Tax Systems for Entrepreneurship and Small Business," which ranks the states according to the costs of their tax systems for small business start up and growth.

Entrepreneurs and small businesses struggle every day with taxes, which affect a wide array of decisions, including hiring, investment, expansion and location. The “Business Tax Index 2008” captures state and local tax costs, and provides businesses and political leaders with a measurement of how their state stacks up against others in this regard.

(Read the full report by clicking here.)

(Visit the "Business Tax Index 2008" state interactive map by clicking here, or go to and click on the “Business Tax Index 2008” image on the right had side of the web page.)

The "Business Tax Index 2008" pulls together 16 different tax measures, and combines those into one tax score that allows the 50 states and District of Columbia to be compared. Among the taxes included are income, property, death/inheritance, unemployment, and various consumption-based taxes, including state gas and diesel levies.

According to the "Business Tax Index 2008," the 15 best state tax systems are: 1) South Dakota, 2) Nevada, 3) Wyoming, 4) Washington, 5) Florida, 6) Alaska, 7) Texas, 8) Colorado, 9) Alabama, 10) Mississippi, 11) South Carolina, 12) Tennessee, 13) Missouri, 14) Ohio, and 15) Virginia.

The 15 worst state tax systems are: 37) North Carolina, 38) Nebraska, 39) West Virginia, 40) Hawaii, 41) Idaho, 42) Vermont, 43) Massachusetts, 44) New York, 45) Rhode Island, 46) Maine, 47) Iowa, 48) California, 49) Minnesota, 50) New Jersey, and 51) District of Columbia.

Raymond J. Keating, chief economist for SBE Council and author of the report, wrote: "In the end, taxes matter. They matter at the federal, state and local levels of government. They matter to consumers, entrepreneurs, investors and businesses. They matter in terms of a state's competitiveness. And they matter when it comes to economic growth and job creation."

The "Business Tax Index 2008: Best to Worst State Tax Systems for Entrepreneurship and Small Business" can be read and downloaded from SBE Council's website at

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