Business Climate Study Released

And it's no surprise that New Jersey, Ohio, and New York are in the top 10 states with the worst business tax climates.

The ten best states in the Tax Foundation’s 2007 State Business Tax Climate Index are as follows:

1. Wyoming
2. South Dakota
3. Alaska
4. Nevada
5. Florida
6. Texas
7. New Hampshire
8. Montana
9. Delaware
10. Oregon

The ten worst states in the Tax Foundation’s 2007 State Business Tax Climate Index are:

41. Minnesota
42. Maine
43. Iowa
44. Nebraska
45. California
46. Vermont
47. New York
48. New Jersey
49. Ohio
50. Rhode Island

The states are ranked according to various criteria:

The SBTCI places 113 variables into five component indexes that each measure a different sector of a state’s business tax climate. The five component
indexes are the Corporate Tax Index, Individual Income Tax Index, Sales Tax Index, Unemployment Tax Index and Property Tax Index. The total score for each state is calculated based on the scores on each of the five component indexes.

Using the economic literature as our guide, we designed these five component indexes to score each state’s business tax climate on a scale of zero (worst) to 10 (best). Each component index is devoted to a major area of state taxation and each has two equally weighted sub-indexes, some of which include several categories and variables under them. Overall, there are 10 sub-indexes and 113 variables.

No matter how you slice it or dice it, the high tax states are at a competitive disadvantage to other lower burden tax states. New Jersey is in a particularly bad situation - not only is the tax climate the third worst in the nation, but it has a significant structural problem with the budgets, where New Jersey Governors are increasingly reliant on one-shots to balance the budget and businesses are reluctant to stay in New Jersey, let alone relocate there because of favorable conditions.