The Washington Post

Western U.S. best for business, Tax Foundation says

For the third year in a row, Wyoming has fostered the nation’s best business climate, thanks to low rates on corporate and personal income taxes made possible by a booming oil industry, according to a new report from the Tax Foundation.

In fact, six of the top 10 states with the best business climate are western states, bolstered at least in part by new revenues from energy production that allows them to reduce other types of taxes. In many cases, the top-ranked states omit at least one major stream of revenue altogether, such as an income tax or a sales tax.

“If you can go without one of the major tax categories, not only do you have one less tool to distort the economy, but you’re also getting rid of a ton of overhead costs,” said Scott Drenkard, a Tax Foundation economist who co-authored the study. “You’re also able to get rid of the dead weight cost on the private side, where people are trying to comply with those taxes.”


Alaska, Florida, Nevada, South Dakota, Washington and Wyoming, all states in the Tax Foundation’s top 10, have no personal income tax. New Hampshire and Alaska have no sales tax.

Utah and Indiana, which place ninth and tenth in this year’s rankings, tax across all major revenue streams, but their rates are low across the board. Indiana, where the legislature cut taxes under former Gov. Mitch Daniels (R), displaced Texas in the top 10.

Texas Gov. Rick Perry (R) has cited the Tax Foundation rankings on trips to Democratic-run states like Illinois and Maryland, on which he tries to recruit businesses to move to the Lone Star State. Texas dropped a spot in the rankings, Drenkard said, because of the Texas margin tax, a tax on gross receipts. Michigan, Kentucky and New Jersey have eliminated gross receipts taxes in recent years, and some Texas legislators want to follow suit.

Northeastern states dominate the bottom 10, thanks to higher taxes on corporations and complicated tax codes. New York came in last place, while Rhode Island, Vermont, Connecticut, New Jersey and Maryland all fell in the bottom 10. California, Wisconsin, North Carolina and Minnesota all have tax rates high enough to qualify for the bottom 10.

Expect the Republican Governors Association to celebrate the rankings: Seven of the top 10 states are run by Republican governors, while seven of the bottom 10 states are run by Democrats.

The rankings won’t stay static next year. Drenkard said a package of tax reforms signed by Gov. Pat McCrory (R) earlier this year will move North Carolina out of the bottom 10; had those tax rules been in effect by the July 1 beginning of the fiscal year, North Carolina would have qualified for 17th place on the list.

Reid Wilson covers national politics and Congress for The Washington Post. He is the author of Read In, The Post’s morning tip sheet on politics.

The Freddie Gray case

Please provide a valid email address.

You’re all set!

Campaign 2016 Email Updates

Please provide a valid email address.

You’re all set!

Get Zika news by email

Please provide a valid email address.

You’re all set!
Comments
Show Comments
New Hampshire has voted. The Democrats debate on Thursday. Get caught up on the race.
What happened in New Hampshire
The Post's Philip Rucker and Robert Costa say...
For Trump, the victory here was sweet vindication, showing that his atypical campaign could prevail largely on the power of celebrity and saturation media coverage. But there was also potential for concern in Tuesday's outcome. Trump faces doubts about his discipline as a candidate and whether he can build his support beyond the levels he has shown in the polls.
The Post's John Wagner and Anne Gearan say...
Hillary Clinton, who was declared the winner of the Iowa caucuses last week by the narrowest of margins, now finds herself struggling to right her once-formidable campaign against a self-described democratic socialist whom she has accused of selling pipe dreams to his supporters.
Quoted
People have every right to be angry. But they're also hungry for solutions.
Hillary Clinton, in her New Hampshire primary night speech
Quoted
I am going to be the greatest jobs president that God ever created.
Donald Trump, in his New Hampshire primary victory speech
Upcoming debates
Feb. 11: Democratic debate

on PBS, in Wisconsin

Feb 13: GOP debate

on CBS News, in South Carolina

Feb. 25: GOP debate

on CNN, in Houston, Texas

Campaign 2016
See results from N.H.

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.