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SBEC REPORT: Best to Worst Tax Systems for Entrepreneurs & Small Business

Thursday, April 16, 2015  
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SBE Council Ranks State Tax Systems
Best to Worst for Entrepreneurs

Tax Day has come and gone, but tax compliance and paying taxes weigh on entrepreneurs and small business owners everyday.At the state level, some states make it easy to deal with taxes. Other states make it real painful.Today, theSmall Business & Entrepreneurship Council(SBE Council) published“Small Business Tax Index 2015: Best to Worst State Tax Systems for Entrepreneurship and Small Business,”which ranks the 50 states according to the costs of their tax systems for entrepreneurship and small business.

(Visit theSmall Business Policy Index 2015 interactive map.)

Raymond J. Keating, chief economist for SBE Council and author of the report, said: “Capital and labor are more mobile than ever before in history. And entrepreneurs, workers, and investment will migrate to where they are treated best. Key among the factors considered are taxes, and that is the case country to country, and within the U.S., state by state.”

Keating noted, “Some states are situated well from a competitive tax standpoint, with others moving in the right direction. Consider that compared to last year’s report, nine states reduced individual and/or corporate income taxes. Those were Arizona, Arkansas, Illinois, Indiana, Kansas, Massachusetts, New Mexico, North Carolina, and Rhode Island.”

SBE Council'sSmall Business Tax Index 2015pulls together 23 different tax measures, and combines those into one tax score that allows the 50 states to be compared and ranked. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

BEST TAX STATES: According to theSmall Business Tax Index 2015, the 15 best state tax systems are: 1) South Dakota, 2) Nevada, 3) Texas, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) Colorado, 9) Ohio, 10) Alaska, 11) Arizona, 12) Indiana, 13) Michigan, 14) Utah, and 15) North Dakota.

WORST TAX STATES: The 15 that fared the worst include: 36) Maryland, 37) Delaware, 38) Rhode Island, 39) Idaho, 40) Nebraska, 41) Connecticut, 42) Oregon, 43) Vermont, 44) Maine, 45) New York, 46) Iowa, 47) Hawaii, 48) Minnesota, 49) New Jersey, and 50) California.

In the report, Keating wrote: “When it comes to state and local taxes – as well as levies at the federal level – the direction that policy should be pointed in is clear. Keep the overall tax burden low. Preferably, do no tax income at all. In the end, if the tax burden is light on economic risk taking, then that will be good news for entrepreneurship, businesses, investment, economic growth and job creation in each state.”

Get complete state rankings and read SBE Council'sSmall Business Tax Index 2015,orvisit the interactive map.

For questions or interviews contact Raymond J. Keating


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