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TaxProf Blog: 2012 Business Tax Climate: Chilliest in Blue States

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January 26, 2012

2012 Business Tax Climate: Chilliest in Blue States

The Tax Foundation yesterday released the 2012 State Business Tax Climate Index (9th ed.) which ranks the fifty states according to five indices: corporate tax, individual income tax, sales tax, unemployment insurance tax, and property tax. Here are the ten states with the best and worst business tax climates:

1	Wyoming	41	Iowa
2	South Dakota	42	Maryland
3	Nevada	43	Wisconsin
4	Alaska	44	North Carolina
5	Florida	45	Minnesota
6	New Hampshire	46	Rhode Island
7	Washington	47	Vermont
8	Montana	48	California
9	Texas	49	New York
10	Utah	50	New Jersey

Interestingly, all ten of the states with the worst business tax climates voted for Barack Obama in the 2008 presidential election, and five of the ten states with the best business tax climates voted for John McCain (and eight of the ten voted for George Bush in 2004).

January 26, 2012 in Tax, Think Tank Reports | Permalink

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Comments

It looks like the gov of NC won't be running for re-election.

Posted by: Sandy P. | Jan 26, 2012 11:02:40 AM

Now compare these rankings with the state's unemployment rates and real estate foreclosures. Nevada #3 and Florida # 5 have the highest unemployment rates in the country and worst real estate markets with the most foreclosures. Iowa #41, Maryland #42, North Carolina #44, Vermont #47, and New York #49 all have below-average unemployment rates. Conclusion?

Posted by: Tax Practitioner | Jan 26, 2012 11:30:29 AM

With a few exceptions, the Mississippi seems to be the dividing line. Maybe the cities whose radio stations begin with "K" are more fiscally responsible than those whose radio stations begin with "W".

Posted by: PacRim Jim | Jan 26, 2012 3:14:45 PM

Possible being unemployed in NY or Ca is so depressing people move?

Posted by: Fred | Jan 26, 2012 3:50:51 PM

"Now compare these rankings with the state's unemployment rates and real estate foreclosures. Nevada #3 and Florida # 5 have the highest unemployment rates in the country and worst real estate markets with the most foreclosures. Iowa #41, Maryland #42, North Carolina #44, Vermont #47, and New York #49 all have below-average unemployment rates. Conclusion?"

My conclusion is you are leaving out very pertinent information. Nevada and Florida have high unemployment in part because they have had insanely high population growth. Just about nobody moves to Vermont and New York and New Jersey have been losing representatives for years.

Looking at actual job creation, the business friendly states have far more jobs (even Nevada) than they did 10 years ago, even in today's weak economy. The business unfriendly states are severely lagging in job growth. Many of #48's jobs have been moving to #9 for the past several years. Very close to none are moving the other direction.

Posted by: mojavewolf | Jan 26, 2012 4:09:44 PM

Hey Tax Practitioner: "Conclusions?"

Well, let's see: at #6, NH's unemployment rate is the same as VT's, and RI is 3rd from the bottom.

My conclusion? I can cherry-pick just as well as you.

http://www.bls.gov/web/laus/laumstrk.htm

Posted by: Yam Dankee | Jan 26, 2012 4:13:57 PM

Conclusion? Correlation does not equal causation - a basic fact that 'tax practitioner' should know, but apparently doesn't.

Posted by: LoneStar78730 | Jan 26, 2012 4:47:55 PM

Coincidentally, I consider most of the last 10 nanny states. NJ, NY, RI, MD, CA, Must wear a motorcycle helmet. Can not get a gun carry license. (Wisconsin gets a pass as just going shall carry.) So my conclusion is that Democrats hate freedom. But I have known that forever!!

Posted by: Dannytheman | Jan 26, 2012 4:55:57 PM

Nevada and Florida have high unemployment and in both cases tourism is the states' number one industry. Tourism as an industry is well know to be more fickle in relation to the national economy rather than the local economy.

Posted by: sbk | Jan 26, 2012 5:55:11 PM

A valid point sbk, but in both states the hardest hit large sector is construction. You don't want to be an unemployed roofer or carpenter in Las Vegas, but the resorts will come back. Same in Florida. In hindsight, it's amazing that either state could sustain such a boom for several decades. It isn't birth rates; it's people fleeing from blue model states. DMV stats in both states, plus Arizona and Texas back this up.

Posted by: mojavewolf | Jan 26, 2012 6:44:35 PM

Come from a family of 5 kids raised in Cincinnati Ohio (#39); we're all in late 40's and early 50's now. Exactly one kid remains in Ohio; the rest? - in Florida (#5) (as are retired Mom and Dad), Texas (#9), Indiana (#11) and Arizonaa (#27). A State cannot stay healthy if it can't hold on to its citizens. The same is true at the country level as the US will learn over the next few decades.

Posted by: Texan | Jan 26, 2012 8:47:48 PM

Referring to Scott P comment that "Iowa #41, Maryland #42, North Carolina #44, Vermont #47, and New York #49 all have below-average unemployment rates."

The Bureau of Labor Statistics has the Unemployment rates by State, seasonally adjusted for Dec 2011 the following rankings, Iowa [5.6%], Maryland [6.7%], North Carolina [9.9%], Vermont [5.1%], and New York [8.0%]. National Average Unemployment according to these numbers is 7.8%.

Leaving out California [11.1%], Illinois [9.8%], Rhode Island [10.8%], shows a bit of "cherry-picking" of data.

Conclusion: Taxes as well as employment base (i.e. what kind of jobs are available) impact employment. However, taxes will also impact how many jobs of any type will be available.

Posted by: Alan Boyd | Jan 26, 2012 8:58:45 PM

In their comments above, Texan, mojavewolf, and others suggest why the Obama administration and its blue-state allies are so hellbent on restricting traditional automotive travel and the mobility of Americans. It stops people from voting with their feet to escape bad government.

Posted by: Jake | Jan 26, 2012 9:20:16 PM

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