Best and Worst State Tax Systems for Entrepreneurship and Small Business

Posted by Dave Dunn on June 10, 2008 | 0 Comments

Tags: Small business, Accounting

The Small Business & Entrepreneurship Council recently published a report titled "Business Tax Index 2008: Best to Worst State Tax Systems for Entrepreneurship and Small Business" which ranks states according to the cost of their tax systems on entrepreneurship and small business. The ranking is based on 16 measures:

• state’s top personal income tax rate
• state’s top individual capital gains tax rate
• state’s top corporate income tax rate
• state’s top corporate capital gains tax rate
• any added income tax on S-Corporations
• whether or not the state imposes an alternative minimum tax on individuals
• whether or not the state imposes an alternative minimum tax on corporations
• whether or not the state’s personal income tax brackets are indexed for inflation
• property taxes
• consumption-based taxes (i.e., sales, gross receipts and excise taxes)
• whether or not the state imposes a death tax
• unemployment tax
• whether or not the state has a tax limitation mechanism
• whether or not the state imposes an Internet access tax
• gas tax
• diesel tax.

The "Business Tax Index" rankings follow:

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
15. Virginia
16. Oklahoma
17. Arizona
18. Georgia
19. Illinois
20. Michigan
21. Indiana
22. Delaware
23. New Mexico
24. Arkansas
25. Utah
26. New Hampshire
27. Kentucky
28. Pennsylvania
29. Louisiana
30. Maryland
31. Montana
32. Wisconsin
33. Connecticut
34. North Dakota
35. Kansas
36. Oregon
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
51. District of Columbia

For descriptions of the factors and more information, read the full report.