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Tuesday, December 06, 2011

Capital Gains Taxes and Risk Taking in the States

When speaking with policymakers in various states about SBE Council's "Small Business Survival Index," a question that often comes up, especially in a down economy, is the following: How can we improve our competitive position without government losing revenue and expanding deficit challenges?

The "Small Business Survival Index" has been expanded this year, using 44 different measures to rank the states according to their public policy climates for small business, entrepreneurship and investment. The measures include a wide range of taxes, regulations, and government spending measures.

Rolling back regulatory costs certainly improves a state's competitive position without creating any kind of added budget deficit worries. So, for example, reducing costly health insurance regulations and mandates; eliminating regulations creating a state minimum wage higher than the federal minimum wage; and adopting right-to-work protections would reduce costs and boost a state's competitive position and economy.

But there are steps that can be taken on the tax relief front as well. In particular, reducing or eliminating state capital gains taxes are major steps forward on enhancing competitiveness and boosting economic growth.

In terms of state individual capital gains taxes, as noted in the "Small Business Survival Index," the 50 states and District of Columbia ranked as follows...

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