According to the Tax Foundation, many states are hampering business growth with complicated tax structures. The group’s 2014 State Business Tax Climate Index recently ranked all 50 states to reflect the competitiveness of a state’s policies to businesses both large and small. The report looked at state income, corporate, property, sales and unemployment insurance tax policies.
This year’s results, like last year’s, revealed that Wyoming has the best business tax climate in the country, while New York has the worst. Alaska and New Hampshire were also ranked among the most tax-friendly states for business.
Tax Foundation economist Scott Drenkard explained that income taxes were included in the report since 94% of all business filings are through this tax, and not corporate taxes.
“Individual income taxes matter because businesses are trying to attract labor to their state. If the choice is between New York City, which has as high as a 12% income tax, and say, Charlotte, where you have much more moderate income tax burdens, all else equal, people might go with the lower-tax option.”
According to the Foundation’s report, the most tax-friendly states for business are:
- South Dakota
- New Hampshire